Resource and Output Trends in the United States Since 1870 ⑧ Moses Abramovitz. The American Economic Review,vol.46,no.2, Papers and Proceedings of the Sixty-eighth Annual Meeting of the American Economic Association. (May, 1956), pp. 5-23. Stable URL http: //links. jstor.org/sici ? sici=0002-8282%28195605%2946%3a23C5%3ARAOTIT%3E2.0.C0%3B2-E The American Economic Review is currently published by American Economic Association. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://w.jstor. org/abou/terms. html. jstor's terms and conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor. org/journals/aea. html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is an independent not-for-profit organization dedicated to creating and preserving a digital archive of scholarly journals. For more information regarding JSTOR, please contact support@jstor.org. http://www.jstor.org/ Mon Sep1800:21:242006
RESOURCE AND OUTPUT TRENDS IN THE UNITED STATES SINCE 1870 By MosES ABRAMOVITZ Stanford University I. Introduction <u This paper is a very brief treatment of three questions relating to ne history of our economic growth since the Civil War:(1)How large has been the net increase of aggregate output per capita, and to what extent has this increase been obtained as a result of greater labor or capital input on the one hand and of a rise in productivity on the other? (2)Is there evidence of retardation, or conceivably acceleration, in the growth of per capita output?(3)Have there been fluctuations in the rate of growth of output, apart from the short-term fluctuations of business cycles, and, if so, what is the significance of these swings? The answers to these three questions, to the extent that they can be given, represent, of course, only a tiny fraction of the historical ex perience relevant to the problems of growth. Even so, anyone ac quainted with their complexity will realize that no one of them, much all three, can be treated satisfactorily in a short space. I shall have to pronounce upon them somewhat arbitrarily. My ability to deal with them at all is a reflection of one of the more important, though one of the less obvious, of the many aspects of our growing wealth; namely, the accumulation of historical statistics in this country during the last generation. For the most part, the figures which i present or which unde erle n qualitative statements are taken directly from tables of estimates of national product, labor force, productivity, and the like compiled by others. In a few cases i have ventured to compute ratios or extend the tables forward or backward by combining estimates. But no original estimates depending on the compilation or reworking of primary data are included * I should like to thank Professor Sir It is to be reprinted as no. 52 in the National Bureau s series of Occasional Papers
The period since 1870 has an important unifying characteristic in that throughout these eig as been response to the complex of cumulative forces which we generally call industrialization. It is quite clear, however, that 1870 was not the be- ginning of the process of industrialization in this country. The propor- tion of gainful workers in agriculture fell from 71 per cent in 1820 to 64 per cent in 1850. It fell another 10 percentage points by 1870 Steam transport by water and rail was already common when the period begins. The proportion of the gainfully employed engaged in manufacturing and construction rose from 12 to 21 per cent between 1820 and 1870. Real per capita output rose significantly during the 1850s. It was set back by the Civil War, but aggregate output well nigh doubled from 1850 to 1870. The data before 1870--and still more before 1850-are highly dubious, but it seems clear that the period since 1870 does not include the entire era of industrialization and rapid income rise in this country. We are, in an important sense, dealing with a period arbitrarily delimited by the availability of fairly reliable com- prehensive figures It may be of some use if i try to state at the very beginning the three ain conclusions of my paper. First, between the decade 1869-78 and the decade 1944-53, net national product per capita in constant prices pproximately quadrupled, while population more than tripled. The source of the great increase in net product per head was not mainly an increase in labor input per head, not even an increase in capital per head, as these resource elements are conventionally conceived and measured. Its source must be sought principally in the complex of tle understood forces which caused productivity, that is, output per unit of utilized resources, to rise. Second, it is not clear that there has been any significant trend in the rates of growth of total output and of output per head. It is true that national product estimates, on their face, suggest some decline in the rates of growth--somewhat more clearly for total output; some what less clearly for output per capita. It is doubtful, however, whether the data can be accepted with confidence for this purpose and still more doubtful whether the apparent retardation in growth, such as it is, rep- resents the effect of persistent forces. Insofar le can observe a de- cline in the rate of growth, its source is not in the productivity of re sources, which has continued to grow at a steady, perhaps an accelerat- These are W. I. Kings d Income of the People of the United g-Term Chang Sim by Simon Kuznets, Cambridge, Bowes es,1952,p.240)
MIC GROWTE: STATEMENT OF THE PROBLEM ing, pace Its source has been a decline in the rate of growth of labor input per head and of capital input per head. Third, the rate of growth of output has not been even. In addition to ordinary business cycles, the rate of growth has risen and fallen since 1870 in long waves of approximately twenty years'duration, Pre liminary study suggests that these waves represent, in the main, surges in productivity or resource supply rather than in the proportion of our resources employed. An adequate understanding both of the history of our growth and of our prospects during the next generation depends on our ability to determine whether these surges and relapses are to some significant degree truly recurrent or wholly fortuit II. The Average Rate of Growth, 1869-1953 My first problem has to do with the over-all expansion of our ecor omy since 1870. My principal criterion of growth is net national prod uct per capita in 1929 prices, and since I use Kuznets' data, I follow him in measuring the increase by comparing average product and re- lated data for labor, capital, and so on, for the decade 1869-78 with that for the decade 1944-53. 2 Comparisons based on such decade averages eliminate most but, of course not all the effects of business cycles, which might otherwise serve to distort somewhat our impre sions of the long-term rate of growth. They do not protect our measures from the effects of fluctuations longer in duration than business cycles, the so-called <secular swings which I shall discuss later. It would be better to calculate rates of growth from properly derived trend values But in measures for a period as long as eighty years, when growth was so rapid, the distortion resulting from secular swings will not prevent us from seeing the broad outlines of the picture, and I judged it un- necessary to calculate statistical trend lines for this purpose 1. Net national product in the decade 1944-53 stood about thirteen times as high as it had in 1869-78(Table 1). This increase implies an average rate of growth of 3.5 per cent per annum. Population, how ever, more than tripled in the same period. Net product per capita therefore,approximately quadrupled, implying an average rate of growth of 1.9 per cent per annum. These calculated rates of increase are only rough approximation of the figures we are really after. Long-term estimates of national prod- Icts are inevitably marred by statistical weaknesses, biases, and un- certainties of conception.(Cf. Kuznets, "Long- Term Changes, " pages 2 Professor Kuznets has very kindly permitted me altered in certain details in ways which Professor will describe in a later
AMERICAN ECONOMIC ASSOCIATION 33-47. )We must accept the fact that even the most comprehensive and onsistent measures of our rate of expansion must be treated with a great deal of reserve 2. The quadrupling-more or less-of net national product per capita resulted in part from an increase in the input of resources per capita and in part from a rise in the productivity, that is, the output per unit, of representative units of resources. However, the shares of hese two elements, insofar as they can be separated, were very dif ferent. The input of resources per head of the population appears to have increased relatively little while the productivity of resources in creased a great deal. How does this arise? The input of resources is usually conceived to consist of labor serv ices, including salaried management, and property or capital services to which is attached the contributions of entrepreneurship made in connection with the investment of capital in industry. If we measure labor services in man-hours, as is usually done, we find that labor in TABLE 1 MEASURES OF U. S. ECONOMIC GROWTH, 1869-78 TO 1944-53 Relatives (1860-78=100) d product per capita ment to population ut of resources oyed worker 18) Index of net national product per unit of total input 348(367) 面: noted, were drawn from series of averages for ives were calculated are shown in the notes to (1)Newly revised estimates by Simon Kuznets(billions of dollars in 1929 prices )to be pub- lished and ibed in the Summary Volume on Capilal Formation and Financing, Part B