Why are there such huge variations in income across the globe?

The answer goes back much further than you think.

The following is an excerpt from my book From Poverty to Progress: Understanding Humanity’s Greatest Achievement. It is part of a series of excerpts that I am publishing on Substack in sequential order. For greater context you can start with the first excerpt from this book.

You can purchase discounted copies of my book at my website, or pay full prize at Amazon.

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Despite the progress of recent centuries, there are still enormous inequalities in how people live their lives. Today some regions have industries churning out complex digital and industrial technologies, while in other remote areas humans still practice hunting and gathering techniques for acquiring their food. The wealthiest societies are tightly clustered into a small portion of planet Earth.

Why are there such contrasts between nations? If progress has been so widespread, why don’t all nations have the same standard of living as the United States and Denmark? What accounts for these radical differences?

While many theorists try to account for these differences with contemporary causes – institutions, political leaders, government policies, trade, colonialism, exploitation, and racism – these differences go far back into history.

For example, if one compares a rank-order list of how prosperous a society is today with the same list for the year 1000, one can see a great deal of commonality. Societies in Europe and those that had recently been settled by Europeans, the Middle East, South Asia and East Asia rank relatively high, while societies in South America, Sub-Saharan Africa, Siberia, New Guinea, Australia and the Pacific Islands rank relatively low.

The differences go back even further than the year 1000. In a fascinating article entitled Was the Wealth of Nations Determined in 1000 BC?, William Easterly and other researchers find a strong correlation between levels of technology and per capita income today with levels in the years 1500, 1000, 0 and even 1000 BCE!

Another study by Louis Putterman and David Weil found that 46 percent of the current variation in per capita income is determined by whether a nation’s people are genetically descended from Europe (even after accounting for other factors). Other researchers have claimed that the time since the society adopted agriculture is a dominant factor in explaining a society’s political development.

Many other studies have found similar results: current differences in wealth and levels of technology are strongly associated with factors in the same society thousands of years ago. This burgeoning literature clearly shows that we cannot account for differences in the wealth of societies with current factors or even factors that are decades or centuries old. We must look back millennia.

One of the problems with determining ultimate causes is that it is always possible to go further back. If one determines, for example, that sailing ships caused important differences in economic development, one can then ask “but what caused sailing ships to be invented in the first place?” If we take this line of questioning to the extreme, then everything is ultimately caused by the Big Bang!

Obviously, using the Big Bang as the ultimate cause that explains human history is going too far, so we need a way to push back the explanation far enough to avoid a long chain of causality, while still not constraining one’s explanatory variables to the present day.

For this reason, I believe that it is necessary to start with causal factors that were in place before modern humans evolved. If such a factor can be used to explain a great deal in the variation of wealth in human societies, then we have gone far enough back that we can be confident that we have found an ultimate cause.

In previous chapters, I explained the role of biology, energy and evolution. All three of these factors preceded the evolution of modern humans. But these are all factors that human societies had in common, so we need another factor to explain differences between societies.

While the answer to why some societies are much wealthier than others is complex and I wish to fully answer the question in later books, I believe that geography is the dominant cause. But geography doesn’t directly place constraints on the development of today’s society. The impact of geography is more indirect than that.

Geography placed hard constraints on the ability of humans to acquire food. The type and amount of food that could be produced either constrained or promoted different society types. Those society types, in turn, either promoted or constrained the innovation of certain technologies, skills, social organizations and values. Without key technologies, skills, social organizations and values, people living in certain societies were not able to innovate and copy the innovations of more complex societies.

Geographical constraints created a trap that persisted for millennia. This created a huge gap in the standard of living between societies and meant that some societies enjoyed progress for centuries while others stagnated until relatively recently.

In future posts, I will go into more detail as to which forms of geography promoted and hindered the development of complex societies. Only in a small sub-set of those relatively complex societies was progress possible.

Stay turned…

The above is an excerpt from my book From Poverty to Progress: Understanding Humanity’s Greatest Achievement. It is part of a series of excerpts that I am publishing on Substack in sequential order. For greater context you can start with the first excerpt from this book.

You can purchase discounted copies of my book at my website, or pay full prize at Amazon.

Stay turned for more excerpts…