Capital in the Twenty-First Century (14 page)

Indeed, according to Maddison’s calculations, both demographic and economic growth
rates between year 0 and 1700 were below 0.1 percent (more precisely, 0.06 percent
for population growth and 0.02 percent for per capita output).
¹

To be sure, the precision of such estimates is illusory. We actually possess very
little information about the growth of the world’s population between 0 and 1700 and
even less about output per head. Nevertheless, no matter how much uncertainty there
is about the exact figures (which are not very important in any case), there is no
doubt whatsoever that the pace of growth was quite slow from antiquity to the Industrial
Revolution, certainly no more than 0.1–0.2 percent per year. The reason is quite simple:
higher growth rates would imply, implausibly, that the world’s population at the beginning
of the Common Era was minuscule, or else that the standard of living was very substantially
below commonly accepted levels of subsistence. For the same reason, growth in the
centuries to come is likely to return to very low levels, at least insofar as the
demographic component is concerned.

In order to understand this argument better, it may be helpful to pause a moment to
consider what might be called “the law of cumulative growth,” which holds that a low
annual growth rate over a very long period of time gives rise to considerable progress.

Concretely, the population of the world grew at an average annual rate of barely 0.8
percent between 1700 and 2012. Over three centuries, however, this meant that the
global population increased more than tenfold. A planet with about 600 million inhabitants
in 1700 had more than 7 billion in 2012 (see
Figure 2.1
). If this pace were to continue for the next three centuries, the world’s population
would exceed 70 billion in 2300.

To give a clear picture of the explosive effects of the law of cumulative growth,
I have indicated in
Table 2.2
the correspondence between the annual growth rate (the figure usually reported) and
the long-term growth multiplier. For example, a growth rate of 1 percent per year
will multiply the population by a factor of 1.35 after thirty years, 3 after one hundred
years, 20 after three hundred years, and more than 20,000 after one thousand years.
The simple conclusion that jumps out from this table is that growth rates greater
than 1–1.5 percent a year cannot be sustained indefinitely without generating vertiginous
population increases.

FIGURE 2.1.
   The growth of world population, 1700–2012

World population rose from 600 million inhabitants in 1700 to 7 billion in 2012.

Sources and series: see
piketty.pse.ens.fr/capital21c
.

We see clearly how different choices of time frame lead to contradictory perceptions
of the growth process. Over a period of one year, 1 percent growth seems very low,
almost imperceptible. People living at the time might not notice any change at all.
To them, such growth might seem like complete stagnation, in which each year is virtually
identical to the previous one. Growth might therefore seem like a fairly abstract
notion, a purely mathematical and statistical construct. But if we expand the time
frame to that of a generation, that is, about thirty years, which is the most relevant
time scale for evaluating change in the society we live in, the same growth rate results
in an increase of about a third, which represents a transformation of quite substantial
magnitude. Although this is less impressive than growth of 2–2.5 percent per year,
which leads to a doubling in every generation, it is still enough to alter society
regularly and profoundly and in the very long run to transform it radically.

The law of cumulative growth is essentially identical to the law of cumulative returns,
which says that an annual rate of return of a few percent, compounded over several
decades, automatically results in a very large increase of the initial capital, provided
that the return is constantly reinvested, or at a minimum that only a small portion
of it is consumed by the owner of the capital (small in comparison with the growth
rate of the society in question).

The central thesis of this book is precisely that an apparently small gap between
the return on capital and the rate of growth can in the long run have powerful and
destabilizing effects on the structure and dynamics of social inequality. In a sense,
everything follows from the laws of cumulative growth and cumulative returns, and
that is why the reader will find it useful at this point to become familiar with these
notions.

I return now to the examination of global population growth.

If the rhythm of demographic growth observed between 1700 and 2012 (0.8 percent per
year on average) had started in antiquity and continued ever since, the world’s population
would have been multiplied by nearly 100,000 between 0 and 1700. Given that the population
in 1700 is estimated to have been approximately 600 million, we would have to assume
a ridiculously small global population at the time of Christ’s birth (fewer than ten
thousand people). Even a growth rate of 0.2 percent, extended over 1700 years, would
imply a global population of only 20 million in year 0, whereas the best available
information suggests that the figure was actually greater than 200 million, with 50
million living in the Roman Empire alone. Regardless of any flaws that may exist in
the historical sources and global population estimates for these two dates, there
is not a shadow of a doubt that the average demographic growth rate between 0 and
1700 was less than 0.2 percent and almost certainly less than 0.1 percent.

Contrary to a widely held belief, this Malthusian regime of very low growth was not
one of complete demographic stagnation. The rate of growth was admittedly quite slow,
and the cumulative growth of several generations was often wiped out in a few years
by epidemic and famine.
²
Still, world population seems to have increased by a quarter between 0 and 1000,
then by a half between 1000 and 1500, and by half again between 1500 and 1700, during
which the demographic growth rate was close to 0.2 percent. The acceleration of growth
was most likely a very gradual process, which proceeded hand in hand with growth in
medical knowledge and sanitary improvements, that is to say, extremely slowly.

Demographic growth accelerated considerably after 1700, with average growth rates
on the order of 0.4 percent per year in the eighteenth century and 0.6 percent in
the nineteenth. Europe (including its American offshoot) experienced its most rapid
demographic growth between 1700 and 1913, only to see the process reverse in the twentieth
century: the rate of growth of the European population fell by half, to 0.4 percent,
in the period 1913–2012, compared with 0.8 percent between 1820 and 1913. Here we
see the phenomenon known as the demographic transition: the continual increase in
life expectancy is no longer enough to compensate for the falling birth rate, and
the pace of population growth slowly reverts to a lower level.

In Asia and Africa, however, the birth rate remained high far longer than in Europe,
so that demographic growth in the twentieth century reached vertiginous heights: 1.5–2
percent per year, which translates into a fivefold or more increase in the population
over the course of a century. Egypt had a population of slightly more than 10 million
at the turn of the twentieth century but now numbers more than 80 million. Nigeria
and Pakistan each had scarcely more than 20 million people, but today each has more
than 160 million.

It is interesting to note that the growth rates of 1.5–2 percent a year attained by
Asia and Africa in the twentieth century are roughly the same as those observed in
America in the nineteenth and twentieth centuries (see
Table 2.3
). The United States thus went from a population of less than 3 million in 1780 to
100 million in 1910 and more than 300 million in 2010, or more than a hundredfold
increase in just over two centuries, as mentioned earlier. The crucial difference,
obviously, is that the demographic growth of the New World was largely due to immigration
from other continents, especially Europe, whereas the 1.5–2 percent growth in Asia
and Africa is due entirely to natural increase (the surplus of births over deaths).

As a consequence of this demographic acceleration, global population growth reached
the record level of 1.4 percent in the twentieth century, compared with 0.4–0.6 percent
in the eighteenth and nineteenth centuries (see
Table 2.3
).

It is important to understand that we are just emerging from this period of open-ended
demographic acceleration. Between 1970 and 1990, global population was still growing
1.8 percent annually, almost as high as the absolute historical record of 1.9 percent
achieved in the period 1950–1970. For the period 1990–2012, the average rate is still
1.3 percent, which is extremely high.
³

According to official forecasts, progress toward the demographic transition at the
global level should now accelerate, leading to eventual stabilization of the planet’s
population. According to a UN forecast, the demographic growth rate should fall to
0.4 percent by the 2030s and settle around 0.1 percent in the 2070s. If this forecast
is correct, the world will return to the very low-growth regime of the years before
1700. The global demographic growth rate would then have followed a gigantic bell
curve in the period 1700–2100, with a spectacular peak of close to 2 percent in the
period 1950–1990 (see
Figure 2.2
).

Note, moreover, that the demographic growth anticipated for the second half of the
twenty-first century (0.2 percent in the period 2050–2100) is entirely due to the
continent of Africa (with annual growth of 1 percent). On the three other continents,
the population will probably either stagnate (0.0 percent in America) or decrease
(
−
0.1 percent in Europe and
−
0.2 percent in Asia). Such a prolonged period of negative demographic growth in peacetime
would be unprecedented (see
Table 2.3
).