Archeology reveals the long-term economic consequences of global trade
A new paper in the Proceedings of the National Academy of Sciences of the United States of America uses archaeology to challenge long-held assumptions about global trade. Many economists think global trade generates prosperity, but struggle to explain the inequalities that often result.
The paper, led by Dr Adam S. Green at the University York, draws on an unprecedented sample of ancient houses assembled by archaeologists as part of the Global Dynamics of Inequality (GINI) project. It finds that in the deep past, economic interaction at very large scales led to phases of rising productivity and falling inequality, but that these phases of sustainable development eventually gave way to increasing inequality. The paper calls these patterns “Kuznets’ Tides.”
Challenging perspectives
In 1955, the economist Simon Kuznets argued that development raises inequality, but that as economies become more prosperous, inequality inevitably falls. Kuznets’ theory dominated policy for half a century, with most of the world’s governments seeking to foster economic development through global trade. However, as the decades wore on, it became clear that economic growth did not always lead to greater equality.
Green and co-authors argue that the fundamental problem is that Kuznets’ theory was based on data from a limited sample of wealthy capitalist economies. Archaeologists study the material remains of societies that are much older, so their data can help address the limits of economic data by bringing in evidence from thousands of years ago, revealing how diverse human economies have emerged and changed through time. With regard to Kuznets’ theory, Dr Green asks: “What happens when we extend our perspective further to encompass archaeological timescales?”
Dynamic research
To answer this question, Green joined the GINI project, a working group of archaeologists from across the globe dedicated to uncovering the long-term dynamics of inequality.
GINI created a database that includes measurements from 53,464 ancient houses from 1,176 archaeological sites across the globe, dating from 21,000 BC to the present. GINI applied an economic tool—the Gini coefficient—to these house areas, providing a proxy measure of inequality in the deep past. GINI also used changes in mean house area over time as a proxy measure of productivity, or economic growth, in the deep past, resulting in a series of studies that highlight the long-term dynamics of inequality in the same special issue.
Radical reevaluations
GINI data allow Green and his co-authors to radically reevaluate Kuznets’ theory. They focused on settlements that exchanged goods and services over distances that stretched across continents and crossed social and cultural borders—not global in the modern sense, but global to the societies that participated in them.
They found that a similar pattern emerged in three key zones of interaction in the deep past, the Bronze Age Interaction Zone of West and South Asia, the Mundo Maya of Mesoamerica, and Britain before, during and after the Roman empire. Each zone was marked by an initial period in which inequality fell and productivity rose, but followed after some time by a spike in inequality.
New thinking
These “tides” recurred in all three examples, and while explaining exactly why there was a shift from high tides to low tides requires more research, there appears to be a relationship with changes in the governance of trade.
Dr Green explained: “Over the very long-term, zonal interaction is first associated with lower inequality and rising productivity. However, contrary to Kuznets, the nature of that trade seems to change over time, shifting from small-scale interactions to resource extraction at ever larger scales, and inequality rises. Tides begin when people create rules to govern trade, say by establishing systems of weights and money to regulate global trade, though these tools do not appear to exacerbate inequalities until they are co-opted by emerging elites.”
A new way to think about sustainable development?
While the scale of global trade is certainly greater today than it was in the deep past, it has long been an essential feature of human economies. Archaeological research can provide vital insights into the dynamics of inequality and economic growth, and offer lessons for contemporary efforts to foster prosperity.
Green and colleagues’ reveal that global trade has a key role to play in increasing productivity and without increasing inequality, but that when it is co-opted by an increasingly small subset of elites, increasing inequality can destabilise human economies.
The paper concludes that: “Over time, rising inequality has often turned the tide against economic growth, ending sustainable development.”