Slouching Towards Utopia summary

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.

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?

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.”

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.

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.

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. 

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 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.

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.