The wealth of humanity as a whole can be determined by the following:

1. Energy available to us
2. Knowledge to transform the energy into something more useful

Everything about humanity effectively remains constant until one of the two variables change. We either discover more of the energy source we already know to use, or we figure out ways to transform the energy.

Agriculture

Early agriculture

The dawn of agriculture marked a pivotal shift in human history, transitioning societies from nomadic hunter-gatherer lifestyles to settled agricultural communities. This era laid the foundation for civilization as we know it, but was characterized by significant limitations in both energy sources and technology.

Energy

In early agriculture, energy was primarily derived from two interconnected biological sources, both ultimately powered by the sun:

1. Human Labor: The most readily available energy source was human muscle power. Farmers expended their own physical energy for tasks like planting, weeding, harvesting, and processing crops. This energy was derived from the food they consumed, creating a direct link between agricultural output and the ability to perform agricultural labor.

2. Animal Labor: As agriculture advanced, domesticated animals such as oxen and horses became crucial sources of power. These animals could perform heavy tasks like plowing and transportation, significantly expanding the energy available for agricultural work. However, like humans, their energy was limited by the food they could consume and the hours they could work.

3. Biomass: Wood and other plant materials served as the primary fuel sources for heating and cooking. While renewable, these sources were often labor-intensive to gather and process.

The reliance on these biological energy sources created inherent limitations. The amount of land that could be cultivated was directly tied to the number of people or animals available to work it. Productivity was constrained by the physical stamina of humans and animals, as well as the need for regular rest and sustenance.

Technology

Early agricultural technology was characterized by simple, often hand-crafted tools and techniques refined over generations.

The primary implements were hand-held tools like hoes, sickles, and digging sticks. These tools, while effective, limited the amount of land a single farmer could work. The development of metal tools marked a significant advancement, allowing for more efficient soil preparation and harvesting. The invention of the plow, initially pulled by humans and later by animals, was a crucial development. It allowed for deeper soil cultivation and the ability to farm heavier soils, but was still limited by the strength of the humans or animals pulling it.

Early farmers developed basic irrigation techniques, such as diverting streams or using simple water-lifting devices like the shaduf. These systems were labor-intensive to build and maintain but crucial for expanding agriculture into drier regions.

Methods like drying, salting, and fermentation were developed to extend the usability of harvested crops. These techniques were vital for surviving lean seasons but were limited in their effectiveness compared to modern preservation methods.

The domestication and breeding of animals for both labor and food was a significant technological advancement. However, the process of selective breeding was slow, taking generations to produce noticeable improvements.

Industrial revolution

Energy

The Industrial Revolution illustrates how advances in energy sources and our ability to harness them can lead to unprecedented wealth creation and societal transformation.

1. Coal: This fossil fuel became the cornerstone of the Industrial Revolution, offering a leap in energy density and availability compared to wood and animal power. Coal’s abundance and high energy content made it an ideal fuel for powering the new industrial processes.
2. Steam: By using coal to heat water into steam, a new, powerful energy source was created. Steam power became the driving force behind many of the revolutionary technologies of the era.
3. Petroleum and Natural Gas: As the Industrial Revolution progressed, these fossil fuels began to be exploited, offering even more energy-dense and versatile power sources. They would go on to power the next wave of technological innovations.
4. Electricity: The ability to generate and distribute electricity opened up entirely new possibilities for energy use and transmission, laying the groundwork for the modern technological age.

Technology

Where once a farmer might spend days behind a horse-drawn plow to prepare a field, steam-powered tractors could accomplish the same task in hours. Threshing, a labor-intensive process that once required teams of workers wielding flails, could now be done by a single steam-powered machine, dramatically reducing post-harvest labor.

The industrial technologies of mass production were applied to create more efficient farming tools. Hand-forged hoes and scythes gave way to mass-produced steel implements. Mechanical seeders and harvesters replaced the back-breaking labor of hand-planting and harvesting, allowing a single farmer to cultivate areas that would have required entire communities in earlier times.

Before the Industrial Revolution, most agricultural products were consumed locally due to the limitations of transport. The advent of steam-powered railways and ships expanded the reach of farmers exponentially. Crops that would have spoiled on a long journey by horse-drawn cart could now be freshly delivered to distant urban markets by train, opening up new economic opportunities for rural communities.

Early farmers relied on natural fertilizers like manure and crop rotation to maintain soil fertility. The industrial-scale production of synthetic fertilizers, particularly through the Haber-Bosch process, allowed for unprecedented increases in crop yields. Fields that might have lain fallow every few years to recover nutrients could now be cultivated continuously, dramatically increasing food production.

The introduction of electricity to farms revolutionized many aspects of agricultural work. Tasks that once required significant manual labor, such as milking cows or pumping water for irrigation, could now be accomplished with the flip of a switch. Electric lighting extended the workday beyond the limits of natural sunlight, a significant change from the sun-dependent schedules of early agriculture.

The later development of the internal combustion engine had perhaps the most dramatic impact on agriculture. Gasoline and diesel-powered equipment eventually replaced both human and steam power on farms. A single farmer operating a modern tractor could now accomplish in a day what would have taken weeks of labor for an entire community in the pre-industrial era.

Technology is deflationary

The impact of these innovations on agricultural productivity was staggering. In medieval England, wheat yields averaged around 500 kg per hectare per year, and one farmer could typically feed only 1-2 people beyond their family. By 1900, wheat yields in England had quadrupled to about 2,000 kg per hectare per year, and a single farmer could feed 10-20 people beyond their family.

This dramatic increase in productivity allowed for a significant shift in the labor force. In the early agricultural era, 80-90% of the population worked in agriculture. By 1900, in industrialized nations, this had dropped to 40-50%, freeing up labor for other sectors and driving further economic growth.

Zooming out, technological advancements have consistently increased our ability to produce more with less. Technological innovations provide the following:

1. Increasing Yields: Allowing more food to be produced from the same amount of land.
2. Reducing Labor Costs: Automating processes that once required significant manual labor.
3. Improving Efficiency: Optimizing resource use, from water to fertilizers.
4. Enhancing Distribution: Enabling faster, cheaper transportation of agricultural products.

InflationData.com (2013). "Food Price Inflation Since 1913".

$1 in 1913 is equivalent in purchasing power to about $31.77 today, an increase of $30.77 over 111 years. The dollar had an average inflation rate of 3.16% per year between 1913 and today, producing a cumulative price increase of 3,077.17%. Compared to the inflation in dollar, prices of goods fell. “Acshually inflation of prices of goods and monetary inflation are not the same” says the midwit, but the point doesn’t really matter because all of these goods are much more affordable.

This happened despite the significant increase in demand. In 2023, the US produced 14 billion pounds of cheese (source). In 1920, only 418 million pounds were produced (source). Mass production is beautiful, and we are delivering high-quality calories to more people than ever.

But evil capitalists price gouge

The argument that corporations engage in sustained price gouging fundamentally misunderstands the dynamics of a functioning capitalist system that protects competition. While short-term price spikes can occur due to various factors, the claim that companies can maintain artificially high prices and excessive profits over extended periods ignores basic economic principles and empirical evidence.

Abnormally high profits decreases over time if healthy competition exists.

A study by the Federal Reserve Bank of St. Louis found that industries with above-average profit rates saw those rates decline over 5-10 year periods, converging towards the mean. Research published in the Journal of Finance also showed that firms with high profitability experienced faster convergence to economic equilibrium compared to less profitable firms.

The real question to ask is, under what conditions do healthy competition disappear? Is it more often the evil corporation that kills all the competitors that capitalization fails to function, or is it governments colluding with corporations intentionally or unintentionally?

While competitive markets tend to erode abnormal profits over time, situations where the government is tightly coupled to the economy can lead to persistent price distortions and inefficiencies.

This phenomenon is particularly evident in traditional communist and socialist countries, where central planning and extensive government control often result in sustained price gouging, shortages, or both.

1. Lack of Market Signals: In centrally planned economies, prices are often set by government decree rather than market forces. This can lead to:
2. Artificially low prices causing shortages Artificially high prices leading to oversupply and waste Misallocation of resources as producers respond to government mandates rather than consumer demand
3. Limited Competition: State-owned enterprises often operate as monopolies or oligopolies, lacking the competitive pressures that drive innovation and efficiency in market economies.
4. Soft Budget Constraints: Government-backed enterprises may not face the same financial pressures as private firms, allowing inefficient practices to persist. Rent-Seeking Behavior: Close ties between government and industry can lead to lobbying for favorable regulations or subsidies, distorting market dynamics.

Aside: I believe that big government is much more malicious than evil capitalists. It’s easy to say shit about the billionaire, when in fact the government spends trillions down the drain on subsidies that in the end only help entrenched corporations.

Healthy competition fails to exist most often when governments protect big companies through evil or well-meaning legislation. GDPR or EU’s data privacy laws killed innovation in the EU because the only companies that could comply with sweeping legislation ends up being large companies.

The phenomena observed in centrally planned economies have, to a significant extent, manifested in the United States’ education and healthcare sectors. Despite the U.S. being predominantly a market-based economy, these two sectors have experienced substantial government intervention, often justified on moral or social grounds. This intervention has led to market distortions reminiscent of those seen in more controlled economies, resulting in rapidly inflating prices and decreased efficiency. These points will be discussed in a separate post.

Technological progress, particularly in energy utilization and production methods, has been the primary driver of increasing abundance and decreasing scarcity throughout human history. It has consistently reduced human suffering and improved living conditions over thousands of years. Technology has enabled us to prevent deaths, reduce suffering, hunger, and free people from labor. It remains our most powerful tool in creating a world where people can live longer, healthier, and more fulfilling lives.

Moreover, politics, culture, and philosophy are, in many ways, derivatives of science and technology. As technological advancements reshape our capabilities and the structure of society, they inevitably influence our political systems and cultural norms. For instance, the printing press democratized access to information, fueling the Enlightenment and reshaping political thought.

The Internet and social media have dramatically altered how we communicate, form communities, and engage in political discourse. Energy technologies, from the steam engine to renewable sources, have influenced geopolitics and environmental policies. Even our cultural values and social structures evolve in response to technological changes, as seen in shifts in work patterns, family structures, and leisure activities throughout history.

“Improvements” in politics or culture therefore do not have significant impact in the grand scheme of things despite them seeming to matter in most people’s myopic timeline - ultimately, they are optimizations on the actual engine that is science and technology.