# Slouching Towards Utopia by J. Bradford DeLong - Blinkist

What’s in it for me? Understand world history through an economic lens.

For most of history, the majority of humanity lived in dire poverty.

Revolutions in agriculture and commerce allowed us to produce enough food to spur population growth.

But social, economic, and technological progress couldn’t keep up with the rising population.

As a result, most working people scrambled to keep their families well-fed and healthy.

But in 1870, the tables turned.

Revolutions in transport, communication, and organization brought world economies closer together – and allowed them to prosper.

For the first time, technology was able to keep up with the growing human population.

The path to a utopia where all humans enjoyed food, shelter, and a decent life became walkable.

Eighteen seventy to 2010 saw more techno-economic progress per year than previous times did in 12 years.

People’s average income increased by a factor of 8.

8.

This isn’t to say that things were rosy.

The twentieth century saw totalitarian ideologies kill millions.

And the exploding wealth was unequally distributed – leaving the Global South, racial minorities, and women to catch up later.

We were slouching, not running, on the path to utopia.

And then we lost it.

In 2010, economic growth ground to a halt in most Western countries.

The great recession of 2008 eroded our trust in the economy.

Politics had to reckon with another problem: letting the economy solve humanity’s problems didn’t necessarily produce the most satisfying results.

In this Blink, we’ll learn how technological change enabled the global explosion of wealth.

But we’ll also look at how governments mismanaged markets, how fascist and socialist ideologies turned dystopian, and why progress eventually turned sour.

Technological progress allowed the world to escape the Malthusian devil.

Just before 1800, English scholar Thomas Robert Malthus wrote his famous book An Essay on the Principle of Population.

Malthus argued that unless curbed by religion, monarchy, and patriarchy population growth would lead humanity into a poverty hell of war, famine, and disease.

He had reason to be pessimistic.

The Industrial-Commercial revolution of the 1500s had allowed the human population to break its previous growth limit of 0.

09 percent per year.

But the rate of technological progress couldn’t keep up with this population growth.

Even after the Industrial Revolution in 1770, population growth outran technological growth by a factor of 1.

5 to 2.

Yes, inventions such as the printing press, the windmill, and the steam engine had revolutionized industry.

But the benefits accumulated at the top – the rich got richer, while the rest of the population languished.

But in 1870, things changed forever.

Humanity’s technological and organizational capacities began to grow – at a rate of 2.

1 percent a year.

What happened?

It wasn’t just new inventions.

Instead, the Northern economies had invented invention.

Previously, innovations had been singular discoveries that provided new ways of doing old things – weaving clothes, for example.

But in 1870, the North Atlantic economy began to develop the industrial research lab.

Discoveries became systematic and were deployed methodically.

On top of that, new communication technologies allowed ideas to disseminate faster.

Inventors like Thomas Edison and Nikola Tesla had their ideas amplified million-fold by the corporations that backed them.

After 1870, technology outran population growth.

Working-class people began to benefit from the advance of industry and a new middle class developed.

Working conditions still seemed grueling by modern standards.

As a blue-collar worker at US Steel in 1910, there was a one in seven chance you would die on the job before your 50th birthday.

But you “only” worked six days a week, and you earned a whopping $900 a year.

By global standards, this was pure luxury.

And wages only kept rising.

Immigrants from all over the world flocked to the US for a chance to become part of the new world.

The great economist John Maynard Keynes rightly called 1870 to 1914 an “economic Utopia.

” And the US was holding the banner.

Globalization accelerated economic growth – but it did so unevenly.

Technological progress eventually generated another accelerant of growth: globalization.

Innovations in transport, such as steamships and railroads, allowed international trade to pick up the pace.

And innovations in communication eased the issues of trust and information transfer that international trade brought with it.

By 1870, investors in London could call companies in Bombay.

Before 1700, international trade consisted of luxury goods and precious metals.

It made up a measly 6 percent of global economic life.

By 1913, it stood at 17 percent.

In this new world, workers in Hamburg ate bread made from North Dakota wheat, London investors financed railroads in California, and Tokyo business owners bought machines made by the workers in Hamburg.

The falling barriers spurred waves of migration.

Between 1870 and 1914, one in 14 humans changed continents – among them historical figures such as Winston Churchill and Gandhi.

The economies of the Global North began prospering together.

In the years leading up to 1914, wages in the US, Canada, and Argentina went up by 1.

7 percent per year.

But the economies of the Global South were left in the dust.

The technological advantage of Northern economies created a sharp international division of labor.

Regions without a literate labor force, engineering practices, or adequate startup capital were left to produce low-value goods like rubber, coffee, and sugar for Northern demand.

On top of that, Europe – and the British Empire in particular – used its technological edge to pursue its imperial ambitions.

By 1914, only a handful of countries, among them China and Japan, had escaped European conquest.

In most places, the imperialists had little interest in helping their subjects jump on an escalator of economic growth.

Occasionally, they provided a package of ports, schools, railroads, and banks, such as in India.

But they failed to deliver the final push to set up modern manufacturing industries.

As the twentieth century progressed, the logic of empire began to crumble.

It became cheaper to produce luxury goods at home and trade them on the international market.

By 1914, the British Empire was already on shaky ground.

And during World War I, the world’s new international entanglements would prove to have some serious consequences.

During World War I, the vision of utopia began to blur.

The Global North led the economy, and thereby the history, of the twentieth century.

For the first half, it would be a history of chaos and destruction.

No one could have predicted it.

The years between 1870 and 1914 had been more peaceful and prosperous than ever.

On an economic level, war just didn’t make much sense anymore.

Why spend money on military conquest when you could make money manufacturing and trading?

But in the summer of 1914, a Serbian nationalist assassinated Franz Ferdinand, heir to the Austro-Hungarian Empire.

Austria promptly declared war on Serbia.

And then, things escalated quickly.

Germany, led by Wilhelm II, saw the opportunity to gain an advantage over France and Russia and joined Austria by attacking Belgium.

The British Empire was bound by treaties to defend Russia and Belgium.

France, hoping to recover lost territory from Germany, pledged its support.

World War I was cruel, bloody, and needlessly long.

Opponents were so evenly matched that they were forced to dig trenches.

And Europe’s aristocratic elites used nationalist propaganda to feed these trenches with young men.

Whole economies switched gear to focus on military production.

Germany established a command-and-control economy that would later inspire the Russian socialists.

In the end, Europe was in ashes, and ten million people were dead.

If one counts the Spanish flu of 1918 to 1919 as a by-product of the war, the casualties ran to over 50 million.

Either way, the world was reordered.

Britain’s power was greatly diminished, but the US was not ready yet to step up as world hegemon.

The Austro-Hungarian and Ottoman Empires quickly crumbled.

Fearing too much interdependence, the remaining countries doubled down on nationalism and isolationism.

Globalization went into retreat.

In Germany, Emperor Wilhelm II abdicated, making room for the Social Democratic Party to lead the new Weimar Republic.

But Germany’s hopeful experiment at social democracy didn’t last long.

After the war, the French and British demanded that Germany make up for the damage.

With the Treaty of Versailles, they bound the German government to exorbitant reparation payments.

The Weimar Republic began to struggle, and its death blow lurked around the corner: the Great Depression.

The Great Depression proved that only an active government can ease an economic crisis.

Ever since history became economic, the world’s governments have been guided by two distinct schools of thought.

One is that of economist Friedrich Hayek, who believed that the economy solves any problem it creates on its own.

Interfering with the market only creates more problems down the line.

Hayek’s philosophy went like this: “The market giveth, the market taketh away, blessed be the name of the market.

” There’s a problem with this.

By definition, the only rights the market recognizes are property rights.

But we humans believe we have other rights, too.

The rights to a stable community and a decent job, for example.

When we leave the market to solve a problem, it doesn’t take those rights into account and that can create deep dissatisfaction.

Wouldn’t it be better if we governed the economy to serve society, and respect all of our rights?

This was the line of economist Karl Polanyi: “Market is made for man, not man for the market.

” By and large, the approaches of twentieth-century leaders fell somewhere between Hayek and Polanyi.

Unfortunately, when the Great Depression of the 1930s rolled around, governments ended up on Hayek’s side.

After World War I, many European governments, including the new Weimar Republic, turned left.

People wanted health insurance, pensions, and public housing, and the new governments delivered.

But they didn’t have enough power to make the rich pay for it.

Instead, they simply ended up printing more money.

The result was hyperinflation.

In 1914, one Reichsmark was worth 0.

24 US dollars.

By 1923, it was worth 0.

00000000000024 dollars (that’s twelve zeros more!

).

To combat hyperinflation, countries scrambled to peg their currencies back to gold, a practice they’d dropped during the war for good reason.

The stock market crash of 1929 further shook people’s confidence in the economy.

And the banking crisis of 1930 sent them into full-blown panic.

Everyone stopped spending and scrambled to turn their assets into cash.

The world economy spiraled into the Great Depression.

Governments could have rectified the excess demand for cash by increasing their spending – buying things, hiring people, or trading financial assets.

Instead, they followed Hayek and did nothing.

Looking back, the Great Depression was simply collective insanity.

In the US, unemployment peaked at 23 percent.

In Germany, the crisis paved the way for an even greater threat.

Fascism and socialism promised their followers utopia but ended up killing millions.

In the fragile period between the wars, three powerful ideologies confronted each other.

The first was the old order of semi-liberal industrial capitalism.

But the Great Depression had called this approach into question.

The alternatives that emerged were as powerful as deadly.

Both fascism and socialism would go on to kill millions of people.

Really-existing socialism was based on the ideas of economists Karl Marx and Friedrich Engels.

They claimed that market economies can’t do anything but produce ever-rising inequality.

But the “inevitable” working class revolution that Marx prophesied never came to pass.

Instead, totalitarian leaders like Lenin, Trotsky, and Stalin tried to force it – with disastrous results.

After gaining power in 1917, Lenin tried to create a centrally organized, top-down, command-and-control economy for the Soviet Union.

It turned out inefficient, wasteful, and corrupt.

At the start of his rule, Russia was about half as rich as the US, with a life expectancy of only 30 years.

By 1921, it was about a third as rich, with a life expectancy of 20 years.

After him, Stalin chose to force Russia’s industrialization by waging war on the peasant population.

The result was 15 million dead due to famine, and 18 to 50 million dead or half-dead in the forced labor camps of the gulag.

In Germany, a different but equally murderous ideology won out.

Fascism, as pioneered by Benito Mussolini, centered itself around ethnonationalism and strong leadership.

Hitler added to it the tenets of anti-Semitism and territorial expansion.

After seizing power in 1933, he’d gained massive popularity by helping the German economy recover from the Great Depression.

But even when he annexed Austria and Czechoslovakia, no one wanted to see another world war coming.

It was only when German tanks rolled into Poland in 1939 that Britain and France started taking action.

France, Russia, and the US joined in later.

The Nazis humiliated the Allied forces again and again.

They tactically outclassed, overwhelmed, and surrounded their opponents.

But the allies brought their full economic power to bear.

In 1944, their war production outnumbered Germany’s efforts by 150 to 24.

In the end, Germany’s defeat was inevitable.

In 1945, as Russian troops closed in, Hitler committed suicide in his bunker in Berlin.

His “total war” and the Holocaust had cost 60 million people their lives.

Fascism is considered to be on the far right of the political spectrum.

Really-existing socialism is on the far left.

But in the end, they produced similarly disastrous results.

Both provided their people with a utopian vision of how society and economy should be organized – and in trying to enforce this vision, produced dystopias.

After 1945, humanity was left to pick up the pieces.

After World War II, social democracy and capitalism won the Cold War.

After World War II, the world was reordered yet again.

The British Empire was dead for good, and the US had more power than ever before.

The Western world was to be shaped in the American model.

What would that model be?

The Great Depression had provided some powerful lessons.

Countries which had bet on austerity had suffered longest and hardest, while those which had increased government spending had recovered quickly.

In the US, left-of-center president Franklin Roosevelt had solved the interwar crisis by increasing public spending, regulating financial markets, and establishing broad social security programs.

So, after World War II, the US and Europe returned to developing mixed economies, with a focus on government welfare.

Even staunch Republicans like President Dwight D.

Eisenhower believed that resurrecting laissez-faire would be downright “stupid.

” The new social programs were paid for by a strongly progressive income tax.

Middle-class wages rose, while inequality reduced.

In the US, the top 1 percent went from holding 20 percent of all wealth in the 1930s, to 12 percent of wealth in the 1950s.

Indeed, the US government post-WWII wedded Hayek and Polanyi under the economic principles of John Maynard Keynes.

As long as the government kept employment high, both people and the economy were happy.

And so the decades after World War II brought another economic growth spurt for the Global North.

Technological innovation, globalization, and social progress picked up the pace again.

Broad political and financial alliances formed – from the EU to the UNO, NATO, and the IMF.

The French nicknamed this period the “Thirty Glorious Years.

” But in the background, the war of ideologies kept simmering.

The Soviet Union still wanted to prove that socialism would work and supported like-minded revolutionaries in capitalist countries.

The US viewed socialism with rising concern and tasked the CIA with thwarting these revolutions.

Fearing the other’s military and nuclear power, both countries multiplied theirs.

In Korea and Vietnam, the Cold War briefly but disastrously turned hot.

Paradoxically, the arms race of the Cold War may have accelerated the growth of Western economies.

Europeans didn’t necessarily embrace American capitalism but they were far more terrified of a Soviet takeover.

And so the US social democratic, capitalist system took over the world.

With the collapse of the Soviet Union in 1990, it became clear that it was a better system than the disaster of really-existing socialism.

But a good portion of humanity was forced to ask, How much better?

Economic growth didn’t benefit everyone equally.

So far, we’ve focused our discussion on the Global North – countries like the US, Britain, Germany, and France.

But what about the rest of the world?

First, let’s recap: the claim isn’t that humanity came anywhere close to utopia during the long twentieth century, but rather that given the rapid economic growth during that time, utopia began to seem like an achievable goal – at least in theory.

But we were slouching, rather than striding toward it.

Because in practice, wealth didn’t develop equally for everyone.

On an international level, the countries of the Global South – China, India, South America, and especially Africa – were left in the dust.

Most countries in those regions couldn’t clear the checklist needed for economic growth after 1870.

This checklist included a stable government, railroads and ports, banks for commerce and investment, education, and strategic tariffs.

And their European colonizers had little interest in lending a helping hand.

When the old empires began to crumble after World War II, the decolonized nations tried to follow the Northern model of establishing social democracies.

But in most places, these new governments proved too unstable to focus on long-term economic development.

In Africa, centuries of trade in enslaved people and exploitation had created a culture of distrust that made it hard for democratic principles to take root.

In South America, property-owning elites were more interested in oppressing the masses than building up local manufacturing.

In several countries like Iran, Guatemala, Nicaragua, and Chile, US secret services helped totalitarian and military dictators gain power for fear of a socialist takeover.

Of all countries outside the Global North, Pacific Rim countries like Japan, South Korea, and Taiwan have fared the best.

China and India, too, have begun to catch up – thanks to the neoliberal turn we’ll discuss next.

But the average income in the US still outranks China’s 3 to 1.

On a national level, the US in particular forgot to include whole chunks of its own population in the wealth explosion.

For the longest time, women and Black Americans were excluded from meaningfully sharing in economic development.

For Black people, the Emancipation Proclamation and the Civil Rights Act of 1965 marked meaningful steps toward equality.

But any tide of racial inclusion was usually immediately mitigated by a rising significance of class and an explosion of wealth inequality.

Even today, half of US states boast election laws that are specifically designed to suppress Black votes.

And the average income of a Black family stands at 60 percent of that of a white family – the same as it was in 1960.

With so much economic growth since then, how could relative inequality widen?

We’ll find out in the next section.

With the neoliberal turn of the 1970s, income inequality deepened.

The “Thirty Glorious Years” after World War II set a high bar for the economies of the Global North.

In 1973, people enjoyed around 2 to 3 times more material wealth than their parents.

But in the 1970s, the oil crisis tripled the price of gas everywhere, causing the inflation rate to rise to between 5 and 10 percent per year.

Economic growth slowed and old fears crept back.

With memories of the Great Depression fading, people began to question the idea of government intervention.

The center shifted right.

In an attempt to curb inflation, President Richard Nixon had already reduced government spending and let unemployment soar.

He called it “shock therapy” for the economy.

In 1982, the unemployment rate stood at 11 percent, and the economy entered a recession.

This was the perfect fodder for neoliberals.

They argued that it was time to return to Hayek.

Even less government spending was the answer to our economic problems.

The neoliberal turn was rapid and affected nearly every country in the Global North.

In the US, Ronal Reagan’s government pushed for high interest rates and financial deregulation.

In Britain, Margaret Thatcher and the Tories promised to restore order by radically cutting government spending.

And in France, President François Mitterrand abandoned his socialist roots in favor of severe austerity.

The new neoliberal line succeeded in curbing inflation.

But it failed to deliver any of its other promises – including raising employment, boosting investment, and strengthening the middle class.

Instead, its principal outcome was tax cuts for the rich.

Under neoliberalism, the top 1 percent more than doubled its wealth.

Tariff reductions and new tech made it easy for bosses to move production overseas.

For the first time, economies in the Global South saw faster income growth than the North.

In the US, median incomes even declined.

The bottom 90 percent of the population began to lose ground.

Yet neoliberalism became conventional wisdom, even among Democrats.

How?

First of all, it benefited the rich, and the rich had big microphones.

Second, it favorably coincided with the end of the Cold War and was somehow given credit for it.

And third, it was giving a dissatisfied population the feeling that no one was getting “handouts” they didn't deserve.

Looking back, neoliberalism was an empirical failure.

But until 2010, politicians could still tell themselves that things were going well.

The financial crisis of 2008 spelled the end of the long century.

In 2007, everything still seemed fine.

There was virtually no inflation, productivity was rising, and the Global South was finally catching up to the North.

US President George W.

Bush had doubled down on the deregulation of his predecessors, and it seemed to be working.

The dot com crash of 2000 had been all but a small hiccup.

But in 2008, the housing bubble burst, and things came crashing down fast.

In the “general glut” that followed, people scrambled to sell their assets and turn them into cash.

What the US government should have done was pump cash into the economy by boosting purchases and employment – just as FDR had done during the Great Depression.

And just as China did now, allowing it to avoid the coming recession.

Instead, the US government decided to make an example of one of the financial firms that had overspeculated during the housing boom.

When Lehman Brothers filed for bankruptcy, the government let it fail.

This move backfired.

People began panic-selling even more, and the crisis deepened.

In Europe, the EU handled the debt crises in Greece just as poorly.

Instead of easing Greece’s debt to let the economy recover, debtors tightened the screws and plunged the country into a recession it still hasn’t recovered from.

The Global North had all but forgotten the wisdom of John Maynard Keynes that had helped them overcome the Great Depression: “The boom, not the slump, is the right time for austerity at the Treasury.

” In times of crisis, the government needs to spend money, not tighten the belt.

The 2008 financial crisis wasn’t a backfire of neoliberal policy, but a direct result of it.

In the US, income growth slowed from 2.

1 to 0.

6 percent.

In France, it now stood at 0.

3 percent.

But instead of turning their backs on neoliberalism, voters began looking for someone to blame.

The right swooped in with various bigoted offerings, digging up age-old human biases.

Eventually, the election of Donald Trump confirmed the end of the “long century.

” This long century from 1870 to 2010 had lifted the world out of mass poverty.

It was the century of globalization, tech-fueled growth, and murderous ideologies.

But it was also one of optimism, hope, and confidence.

It eventually turned into the century of social democracy and American exceptionalism.

Humanity wasn’t exactly running toward utopia – it was slouching.

The path was unequal, but it was walkable.

It seems we have lost our path and entered an era of pessimism, fear, and panic.

It’s a new century, whose principal narrative remains to be written.

Final Summary

Between 1870 and 2010, the world saw an explosion of material wealth.

Technological progress and globalization lifted the world out of mass poverty.

The wealth was distributed highly unequally, but humanity began walking a path that may well have ended in utopia.

Briefly, the murderous ideologies of socialism and fascism blocked all possibilities.

But after World War II, social democracy blossomed.

Governments turned away from Hayek’s laissez-faire approach to the economy and embraced Keynes: guarantee full employment through spending.

But the neoliberal turn of the 1970s reversed this progress and ultimately culminated in the 2008 financial crisis.

By 2010, the path to utopia was no longer visible.

Economic growth in the Global North has ground to a halt and the long century has ended.