Thursday, December 30, 2010

The standard of living across time and space

A very basic question for historians is how to measure and compare the standard of living experienced by people in different historical settings. Is it possible to arrive at credible estimates of the standard of living in the Roman Empire, medieval Burgundy, nineteenth-century Britain, and twentieth-century Illinois? Can we say with any confidence that Romans had a higher (or lower) standard of living than a twelfth-century Burgundian?

One part of the problem is conceptual. What do we mean by the standard of living? Is there a specific set of characteristics that are constitutive of the standard of living -- say, nutrition, income, access to health remedies and education, quality of housing, personal security? And how should we take account of the unequal distribution of these characteristics across a given population? Should we be content with an estimate of an average level of nutrition -- even though this may reflect a misleading impression of the circumstances of the poorest segment of society? Should we hope to be able to arrive at an estimate of the standard of living of certain typical social actors -- landless workers, skilled laborers, merchants?

The second major problem we must confront is the availability and quality of historical data about wages, prices, and consumption. The series of wages and prices that are available in different countries are, of course, incomplete. And, more importantly, the commodities that satisfy basic nutritional needs are different in different countries and regions. So it is necessary to make assumptions about the nutritional equivalents in different cultures before we can begin to arrive at estimates of relative standard of living.

Different approaches to these problems have been offered in the past fifty years. One logical approach is to consider a list of "necessities of life" and to estimate the degree to which these necessities are available to people of various stations in various times and places. Nutrition, housing, and clothing are close to the core for much of the history of humanity, and for much of that time, these goods have been available largely through the market at a price. So a standard approach has been to define a wage basket; measure the prices of the goods in the basket; and measure the typical earnings of people in historical settings of interest. This allows us to calculate the subsistence rate -- the percentage of the population whose income is more than sufficient to purchase the items in the wage basket. What this leaves out is "self production" (for peasant farmers, for example) and state provision. Another logical approach is to look at the human results -- the overall health status of people at various times and places. This can be estimated by contemporary data -- height, longevity, and age information collected by the military, for example -- or by analysis of skeletal evidence centuries later. (Amartya Sen's The Standard of Livingreviews many of the complexities of defining the standard of living and offers his own rationale in terms of capabilities and functionings.)

An important step forward is now possible in our ability to estimate and compare historical living standards, thanks to the research by an international group of scholars in Living Standards in the Past: New Perspectives on Well-Being in Asia and Europe, edited by Robert Allen, Tommy Bengtsson and Martin Dribe. The introduction to the volume by Allen, Bengtsson, and Dribe does a great job of providing an overview of the issues. All the essays are first-rate, and particularly noteworthy are contributions by Kenneth Pomeranz, Li Bozhong, and Robert Allen. (Here is a link to the table of contents of the volume, which gives an idea of the breadth and rigor of the research.)

This group has concentrated their efforts around the current controversy about European and Asian growth patterns in the early modern period. This has several parts: first, careful comparison to determine whether there was a significant difference in the standard of living between Europe and Asia (as held by Smith, Malthus, and Marx); and second, to attempt to determine the timing and causes of differences as they emerged. The editors describe the group's purposes in the introduction in these terms:
How did the standard of living in Europe and Asia compare in the seventeenth and eighteenth centuries? (Kindle loc 230)
The main concern of this book is to assess when the gap between the East and the West emerged and to not only take economic perspectives into consideration but social and demographic ones as well. (Kindle loc 159)
The researchers bring three methodologies to bear on these questions: economic analysis of prices and wages to estimate the real wage; demographic analysis of biometric features such as height, longevity, and fertility to estimate relative standard of living; and historical population analysis to observe the severity of adaptation (mortality, fertility, migration) created in a population by shortterm economic stress, including especially food prices. Here the reasoning is that a population that is close to the edge of subsistence in normal times may be expected to have higher mortality, lower fertility, and greater out-migration than a population with a more comfortable standard of living. So demographic change can be used as an indirect measurement of a population's standard of living. Using these three reasonably independent instruments of observation, it is reasonable to expect that we will gain a fairly accurate idea of the standard of living in a region and how it compares to other regions. The last approach is probably the most innovative:
There were demographic responses ... to high food prices. In the worst case, high prices caused death for those unable to buy enough to eat. In less extreme situations, people resorted to demographic strategies in response to high food prices. These included postponed marriages, migration, and delayed births. Studies of the correlation of death, migration, marriage, and childbearing with food prices, therefore, provide a new approach to the measurement of the standard of living. When aggregate data show that high food prices raised mortality or reduced fertility, one can conclude that the bulk of the population had a low standard of living. (Kindle loc 288)
Cameron Campbell and James Lee make use of this approach in their contribution, "Living standards in Liaoing, 1749-1909: Evidence from demographic outcomes," to assess the standard of living of the bulk of the population in Liaoning in northeast China. They find that the mortality and fertility responses to changes in rice prices essentially disappeared in the north and south of Liaoning in 1780-1850 -- which leads them to infer that the standard of living and nutrition had risen over the past century. (James Lee and others return to this kind of reasoning in Prudence and Pressure: Reproduction and Human Agency in Europe and Asia, 1700-1900, by Noriko Tsuya, Wang Feng, George Alter, and James Lee.)

Robert Allen attempts to establish something like an empirical baseline for the real wage in different parts of Europe and Asia in his contribution, "Real wages in Europe and Asia: A first look at the long-term patterns". He compiles a large dataset of wage data for a number of European cities, and he makes careful inferences about comparable data for India, Japan, and China.
Wages reveal the standard of living if they are compared to the price of consumer goods. This is the interpretation that matters in assessing the prosperity of Asia vis-a-vis Europe. Provided low Asian wages were matched by low consumer goods prices, the standard of living of workers could have been the same at both ends of Eurasia even though Asian manufacturers had a competitive advantage in the textile industry. (Introduction to "Real Wages")
Allen notes that it is necessary to make a number of adjustments in order to estimate the cost of a wage basket in Asia, because of large differences in diet. Allen stipulates 143 kgs/year of rice for the Asian basket versus 208 kgs/year of bread in the European basket. And he converts prices and wages into silver to permit comparison of prices across Europe and Asia. Here is one of Allen's summary graphs comparing laborers' real wages in Japan (farm), Kyoto, England (farm), Oxford, and London.

The graph indicates a significant premium for laborers' wages in London, whereas Japanese and English farm wages are fairly similar throughout most of the period. And it indicates a "take-off" for London laborers' wage beginning in the mid-nineteenth century -- not paralleled by a similar take-off in Kyoto.

Here are Allen's conclusions:
The wage comparisons undertaken in this paper support several important conclusions about living standards in pre-industrial Europe and Asia.
First, wages expressed in grams of silver were lower in China and India than in Europe. The views of the eighteenth century observers cited by Parthasarathi are confirmed. This is important since it was the proximate cause of Asia’s competitive advantage in textiles and luxury manufactures and was, thus, the basis for Asian-European trade in the early modern period. Why these differentials persisted for hundreds of years is an important question in international and monetary economics that must be addressed to explain the dynamics of the world economy in this period.
Second, low Asian silver wages were matched by low Asian prices with the result that living standards in Asia were similar to those in many parts of Europe. Farm workers in Europe and urban workers in central and southern Europe did not enjoy higher living standards than their counterparts in Asia.
Third, some parts of Europe did generate higher real wages than we find in Asia. When real wages were at their peak following the Black Death, most Europeans had a higher standard of living. But this was a transitory condition for most of the continent. High wages persisted only in the commercial centres of the northwest – London and the Low Countries generally. During the eighteenth century, the provincial towns of England were drawn into the same high wage orbit, but agriculture was left behind. This dynamic, urban economy was the engine of growth in early modern Europe, and Asia appears to have had no counterpart. It is possible, of course, that a more extensive Asian database would reveal a parallel: the absence of information on urban Chinese wages is particularly troubling in this regard. However, neither the Japanese cities nor the capital of the Moghul Empire had particularly high wages. The evidence at hand suggests that Asia lacked Europe’s engine of growth. (Conclusion of "Real Wages")
Contributions by Kenneth Pomeranz and Li Bozhong take up the issue of the supposed backwardness and stagnation of the Chinese rural economy at the beginning of the eighteenth century. In The Great Divergence: China, Europe, and the Making of the Modern World Economy Pomeranz argued that England and the Yangzi Delta region had roughly comparable levels of productivity and similar levels of standard of living for poor people (laborers and peasants). In his contribution to this volume he pushes this argument forward with more empirical analysis of the standard of living in China. He attempts to handle the "commensurability" problem mentioned above by converting subsistence food commodities to calorie equivalents. He finds that Chinese data for seventeenth century laborers indicate a daily diet of 2,800 calories for adults in the eighteenth century (Kindle loc 532).
Overall, then, the food component of the standard of living seems generally comparable in eighteenth-century China and Europe, and in the most advanced regions of both. (Kindle loc 626)
So Pomeranz's research here broadly confirms the view he advanced in The Great Divergence, that the standards of living in comparable regions of Europe and China were roughly the same; and he also confirms a significant decline in the standard of living for the bulk of the Chinese population in the nineteenth century.

Li Bozhong takes up the stagnation issue from a different point of view, a careful consideration of farm labor productivity in the Lower Yangzi region. This extends his important work in Agricultural Development in Jiangnan, 1620-1850. And his central finding is an important one as refutation of the standard involution interpretation of China's economic history; he finds that agricultural productivity rose from 1620 to 1850.
The central theme of this chapter is that labour productivity on farms did improve in Jiangnan between 1620 and 1850. The region of Jiangnan, located in east China and consisting of eight late Imperial Chinese prefectures in the Yangzi Delta, has been the most economically and culturally advanced area in China for centuries. ... In some sense, this region is the best 'window' through which we can clearly see economic changes in China before the arrival of the modern west. (Kindle loc 1038)
The issue of productivity is key to an assessment of the standard of living, because flat or declining productivity in a region with a rising population implies a falling standard of living -- the general "theorem" of Malthus. So Pomeranz's finding would be difficult to support if we were forced to conclude that agricultural productivity was constant or falling. But Li's careful and data-rich analysis indicates, to the contrary, that there was substantial gain in productivity from the Ming to the mid-Qing.
The 'trinity pattern' is the optimal pattern in the Jiangnan peasant economy because under this pattern higher yields per mu can be achieved with lower inputs. As I point out above, in the early seventeenth century, a farm ran, on average, 15 mu of cultivated land with a multi-cropping index of 140%, the second crop being wheat. The yield per mu was 1.7 shi for rice and 1 shi for wheat. If all the 15 mu of land were planted in rice, this farm would harvest 26 shi of rice and 6 shi of wheat, together equivalent to 30 shi of rice. In contrast, in the mid-nineteenth century, the average farm size was 9 mu with a multi-cropping index of 170&. Per mu yield was 2.5 shi of rice and 1 shi of wheat. Farm output was 23 shi of rice and 6 shi of wheat, totalling 27 she of rice, 10% below the early seventeenth-century figures. However, if we calculate labor productivity according to the number of workers, output per worker would be 15 shi of rice in the early seventeenth century and 27 shi of rice in the mid-nineteenth century respectively. That is, the figure for the late Ming period is only 55% of the mid-Qing figure. (Kindle loc 1160)
So labor productivity had risen significantly from 1650 to 1850. Li's conclusion is clear:
Since labour productivity and the standard of living are inseparably linked, the rise in farm labour productivity in Jiangnan implies an increase in the peasants' standard of living. ... There is little doubt, therefore, that real incomes of peasants did improve considerably in Jiangnan at this time. Second, the quality of the peasants' diet also improvied in Jiangnan during the period. Fang Xing suggested that ordinary Jiangnan peasants ate more fish, meat, and tofu, drank more tea and wine, and consumed more sugar than ever before. ... The improved standard of living can also be seen in the increase in consumption, not only of 'ordinary goods' like cotton cloth, but also of 'luxury goods' such as silk, wine, tobacco, and opium. (Kindle loc 1221)
What is most valuable about this project is the empirical grip it provides on these important questions: What have been the dynamics of the standard of living across Eurasia from the middle ages to the twentieth century? And, eventually, what economic and demographic forces account for the inflection points and persistent differences in different regions that are documented? And, as all the contributors agree, one of the key discoveries is the fact of variation at every level, from regions of England to regions of Europe to the ends of Eurasia.
The contributions of this book show the highly complex and diverse pattern of the standard of living in the pre-industrial period. The general picture emerging from these studies is not one of a great divergence between East and West during this period, but instead one of considerable similarities. These similarities not only pertain to economic aspects of standard of living but also to demography and the sensitivity to economic fluctuations. In addition to these similarities, there were also pronounced differences within the East and within the West -- differences that in many cases were larger than the differences between Europe and Asia. This clearly highlights the importance of analysing several dimensions of the standard of living, as well as the danger of neglecting regional, social, and household specific differences when assessing the level of well-being in the past. (Kindle loc 455)

1 comment:

russell1200 said...

So if there is not this distinctive difference in demographics (which I may be incorrectly taking as your conclusion - based on it being the last statement in the sequence) than Jack Goldstone's idea that the European move forward in technology has its basis in a change in the way of thinking there: might be given more weight.