The Diamond of Sustainable Growth

A Historical Framework for the study of political economy and economic development

George David Smith, Richard Sylla, Robert E. Wright(

NYU Stern School of Business

For most of its existence, humanity neither enjoyed nor understood economic growth, or society’s capacity for creating wealth. Prior to the 18th century, the aggregate incomes of particular societies may have increased a little for short periods in a few places, but most of the time incomes hovered not far above the subsistence level. Powerful leaders and ruling classes could accumulate vast wealth, but this was normally achieved through the redistribution of incomes from the weak to the powerful, and certainly not through the creation of wealth as we know it today. Going back centuries, to paraphrase the 17th-century English philosopher Thomas Hobbes, human life was solitary, poor, nasty, brutish and short. Peace and good weather were more likely to summon forth children more than prosperity. Whenever war, pestilence, and drought returned -- and they always did -- people died in droves. To many observers, humanity appeared doomed to spend eternity wet, cold, hungry, and grief-stricken. In the late 18th century, the English proto-economist Thomas Robert Malthus warned that the mass of humanity, quite aside from the foregoing perils, was doomed to a life at the margins of starvation, as surges of population growth would inevitably outstrip the finite sources of food supply. No wonder, then, that Victorian-era historian Thomas Carlyle called economics the “dismal science.” For all the achievements of human civilization, economic growth and widespread prosperity were barely experienced, let alone understood, phenomena. The idea that food, let alone wealth, might be produced in greater abundance did not fit the experience of history. Yet, even