Innovism, a term that the U.S. economic historian Deirdre McCloskey prefers to the somewhat misleading and pejorative “capitalism,” denotes a process of material enrichment based on innovation and trade or “trade-tested betterment” (another term she coined). Trade benefits humanity in a myriad of ways. It allows us to discover the true value of goods and services. It promotes cooperation by building trust between contracting parties. And, most obviously, it enables us to buy goods and services that we would not be able to produce ourselves.
But trade alone did not bring about the “order of magnitude” enrichment that saw global GDP per person rise from less than $3 in 1800 to over $40 in 2016 (in 2011 dollars). To explain our unprecedentedly high standards of living, we need to turn to another aspect of innovism: innovation.
To give just one example, agricultural production can increase when more peasants with more plows farm more land. But after the introduction of tractors, GMO crops, and synthetic fertilizers, agricultural productivity skyrocketed. Humanity can now produce more food using fewer workers and less land. By increasing productivity per worker, innovism can make something that was previously unattainable or prohibitively expensive common and affordable.
Consider sugar. People have been sucking on sugarcane for eight millennia. Refined or granulated sugar, which the Indians learned to make between the 1st and the 4th century AD, reached Western Europe via the Crusades in the Holy Land in the 11th century. In 1319, sugar sold for “two shillings a pound” in medieval London. That’s equivalent to 10 days of a skilled tradesman’s labor. Assuming an eight-hour workday, the tradesman had to work 80 hours to afford a pound of the sweet stuff. Today, the British supermarket chain Tesco sells a pound of granulated sugar for 30 pence or 1.89 minutes of labor on Britain’s “living wage” of GBP 9.50 (i.e., 0.30 ÷ 9.50 = 0.0315 hours or 1.89 minutes).
The “new spice” or the “fine spice,” as the Europeans called refined sugar, was akin to pepper, which was dearer than gold. Sugar remained prohibitively expensive even after the Europeans learned how to extract it from the sugarcane (Venice became the main refining and distribution center on the continent) and began to import granulated sugar from the colonies. (Christopher Columbus introduced sugarcane to the New World in 1492, and Europeans started to import African slaves to grow sugarcane in the Americas in the 16th century.)
Thus, most Europeans continued to sweeten their food and drink with honey. As late as the 16th century, William Shakespeare implied that “spices” were so precious as to keep them under lock and key in his play Romeo and Juliet.
Lady Capulet: Wait. Take these keys and get more spices, Nurse.
Nurse: They’re calling for dates and quinces in the pastry kitchen.
Capulet: Come on, wake up, wake up, wake up! The second cock crowed. The curfew-bell rang. It’s three o’clock. Go get the baked meats, good Angelica. Don’t worry about the cost.
The real breakthrough in the affordability of sugar came in 1747 when German chemist Andreas Sigismund Marggraf (1709 – 1782) used alcohol to extract juices from a number of different plants, including Beta vulgaris, which originated in Silesia (now part of Poland). Today, the plant is popularly known as the “sugar beet.” Using a microscope, Marggraf noticed that crystallized sugar beet juice was identical to cane sugar. Marggraf’s discovery was not fully appreciated until after he died, with the first beet-sugar refinery opening in 1802.
Production of sugar from the sugar beet got a massive boost during the Napoleonic Wars when the Royal Navy blockaded the European continent – most of it under French control – and cut the French off from their sugarcane growing colonies in the Caribbean. “To replace the lost source of sweetness,” noted one source, “Napoleon directed the creation of a domestic beet sugar industry … By the tail end of the Napoleonic Wars, 300 French factories were producing nearly eight million pounds of beet sugar.” Aside from allowing the French to get around the British blockade, beet sugar was not produced with slave labor, which appealed to 19th century abolitionists like the Quakers.
By 1850, productivity gains allowed for sugar to come within the reach of more people, selling for 17 cents a pound in the United States. Given that a factory worker earned six cents an hour, he (and it was mostly “he” in that era) had to work two hours and 50 minutes to earn enough money to buy one pound of the sweet substance. Today, up to 60 percent of the U.S. sugar comes from the sugar beet (the rest comes from sugarcane) and sells for about 32 cents a pound. (The U.S. government’s tariffs and subsidies, which protect domestic sugar producers from global competition, keep the U.S. sugar prices well above the world price of 17 cents a pound).
The hourly compensation rate of a U.S. factory worker, in the meantime, rose to $32.54. So, a pound of sugar now “costs” 35 seconds of work. Put differently, the two hours and 50 minutes of work required to buy one pound of sugar in 1850 gets a factory worker 288 pounds of sugar today. Since 1850, life got 28,700 percent sweeter. Next time you enjoy a cup of coffee and a donut, thank human innovation for our astonishing abundance!
Marian L. Tupy is a senior policy analyst at the Cato Institute and editor of HumanProgress.org. Gale Pooley is a Senior Fellow at Discovery Institute and a Board Member of HumanProgress.org.