By Dr. Nayyer Ali

June 23 , 2017

Human Prosperity

Humans developed the first agricultural settlements roughly 8,000 years ago, and since then have had a slowly expanding population, but not much change in material prosperity. There were roughly 5 million people on the entire planet at the dawn of agriculture. By the year 1 of the Common Era, that had risen to 170 million, and during the time of the Prophet, it was up to 200 million. While populations rose as more people used agriculture and more open land got settled, the standard of living was one of mere subsistence on the edge of starvation. Perhaps a few wealthy people rose above that, but things did not begin to change much until the Industrial Revolution.
Starting in Western Europe and North America in the early 19th century, the economy began to grow faster than the population, and as such the average person began to have better income and life. By the late 19th century this process began to spread to Japan, eastern Europe, and Latin America. In the 20th century, things really took off, and after decolonization in the years after 1945, Asia and Africa too began to participate in growing economies.
It is startling to sit back and look at what really happened in the 20th century. The GDP of the entire planet and its 1.6 billion people in 1900 was roughly equal to 4 trillion dollars in today’s dollars. By 2000, that number had risen to 70 trillion dollars. The population did expand, reaching 6.2 billion in 2000, but even after accounting for that the income per person soared from 1,250 dollars per person to 11,300 dollars per person. This happened despite the many calamities that occurred in the last century. Two world wars, the Great Depression, the Cold War and the collapse of the Soviet Union, Mao’s Great Leap Forward in China that resulted in mass famine and the deaths of 30 million people, and the fact that much of Africa and Asia were European colonies until after World War Two.
This giant leap in wealth and income in the last century was not evenly spread. Western Europe, the US, and Japan, enjoyed extremely high living standards, while much of sub-Saharan Africa remained extremely impoverished. But incomes did rise for the vast majority even in poor countries, and extreme poverty was greatly reduced. This rise from 4 trillion to 70 trillion was the result of an average growth rate of 3% per year for 100 years.
Because growth is exponential, it is just as hard to go from 500 dollars in income to 5,000 as it is to go from 5,000 to 50,000. Since the start of the new century, this same 3% growth rate has continued, and global GDP has gone from 70 trillion to 125 trillion dollars (the US alone is at 20 trillion dollars). This recent surge has sent hundreds of millions out of extreme poverty and into a decent existence. It can be seen in the surging middle classes of many poor countries, including Pakistan. The massive increase in households with cell phones, motorcycles, televisions, air conditioners, and other conveniences is further concrete evidence of this change. And this happened despite the ravages of the Financial Crisis and the Great Recession and the lack of meaningful growth in the Eurozone countries.
Given the massive wealth increase that happened last century despite its calamities, what will happen in the rest of this century? Major powers no longer go to war as no one believes you gain anything by it anymore. This hopefully means that there will be no world wars in the future. If the global economy continues to grow at 3% per year, what will that mean? In 2100, the economy would be 1400 trillion dollars in size, over 10 times larger than present. Population will only grow to about 11 billion, so the average person in 2100 would have an income of 127,000 dollars, more than double the average income of the current American. But let’s say 3% is too optimistic, and the global economy only manages 2% growth for the next 83 years, then we still get to 650 trillion dollars, or more than 5 times the size of the present world economy. It is quite clear that even people living in relatively poorer countries will have a standard of living that we consider quite high.
Given how rich we will become as a planet, we should have the resources to solve our important problems. Our grandchildren’s children will live in a world without poverty, without hunger, and without armed conflict. The entire world will look more and more like Western Europe. Issues like climate change and protection of the environment will become much easier to solve.
Will there be an end to this growth? Is there a certain level of wealth that we cannot go above? I don’t see how that can be the case. As long as we have minds that think and inventors and researchers to develop new products, new methods, better and more efficient ways of doing things, and all the new ideas that our imaginations can conjure up, we have no obvious limit. Where will that take us not just in the next 83 years, but in the next 583 years? What is our destiny on this planet and beyond? 8,000 years ago we were 5 million people living in scattered bands of hunter-gatherers around the globe. Where will we be 8,000 years from now?


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Muslim Perspectives on Zionism

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The Collapse of Oil Prices

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Annual Economic Survey of Pakistan

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Editor: Akhtar M. Faruqui
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