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12May

Journey of Humanity by Oded Galor review – inequality explained?

An study of the factors behind economic growth attempts to reveal the ‘great cogs’ that drive development

For most of human history, we were caught in a stagnation trap. Improvements in technology and productivity led to population increases, and all those new people gobbled up the surplus, so that overall living standards always reverted to the historical average, barely above subsistence. Thomas Malthus, the unfairly maligned English clergyman, assumed this would always be the case. And yet, at least in the fortunate global north, things have been very different for the last century or so. How come?

This is the question the economist Oded Galor devised his rather grandiosely named “Unified Growth Theory” to address. (He uses lots of metaphors from physics, including “phase transition”, “economic black hole”, “gravitational forces”, and the like.) His answer, briefly, is that we sprang free of the Malthusian trap because of the effect the Industrial Revolution had on fertility rates. Rapid technological change placed a higher value on education, and families invested more in children’s schooling, which meant they could not afford to have so many children as before. So productivity gains were not swallowed up by burgeoning population. This virtuous cycle has persisted until the present, and might even, Galor suggests with unfashionable optimism, help us combine continued growth in living standards with reductions in carbon emissions.

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