250 years of Modern Capitalism (Annex on the data and on methodology)

Main economic variables (1760 – 2018).

Legend: The grayed values have been included in the text and in graphs.

Sources and Presentation of the Data.

Data sources for our graphs.

Data on GDP per capita, labor productivity per worker and real wages (see below for more details) are from the Core project: Unit-2-data-file-for-charts (Website subscription is required). Those on life expectancy at birth are from version 7 of the Gapminder database. The rate of surplus value has been calculated in a traditional way, by dividing productivity by real wages (See below for more detail). Annual working time, unemployment rate, syndication rate and the number of social conflicts in Great Britain were taken from the Bank of England’s historical database. The level of industrialization in the world, developed countries and the ‘Third World’ are drawn from the work of Paul Bairoch (Volume III p. 860, 1997). The distribution of income worldwide and the number of people living below the absolute poverty line are from Our World in Data (also available in the Gapminder database mentioned above).

Presentation of the data.

In order to better reveal the true trends, beyond purely cyclical variations, we have smoothed most of the data over five years, i.e. each annual value is replaced by the average of itself and the values of the two adjacent years.

In order to better compare their respective evolution, we then transformed our data into indices starting on a given date, usually 1760.

Finally, in the same vein, some of our graphs are presented on a logarithmic scale (instead of an arithmetic one) to better understand the respective growth rates of the indicators because, in this case, the slope of the curve gives us its growth rate.

Notes on the choice of the series on the evolution of real wages.

From the various estimates of real wages’ developments, we have chosen the most recent and consistent one. It is also the one that enjoys the largest consensus at the moment. It was prepared by one of the best economic historians at present: Robert C. Allen. It is based on estimates that were already considered as the best (those of Charles H. Feinstein and Cregory Clark), while improving them. It makes it possible to rule out with certainty a significantly divergent estimate prepared by Peter Lindert and Jeffrey Williamson, which is flawed and very ideologically oriented. Moreover, and not least, it is also corroborated by other sources and methods, such as changes in the average population height (see graph below), or in life expectancy at birth (idem). Indeed, the body height data follow the same trend as that of R. C. Allen’s real wages. The same is true for life expectancy, which also suggests a deterioration in living conditions during the first century of the industrial revolution, only to improve from 1860 onward. Life expectancy in 1860 in the two centers of the industrial revolution, Liverpool and Manchester, of 25 and 30 years respectively, are a sufficient indication of the deterioration suffered by the working class during this first century of the industrial revolution (see graph below).


The calculation of the rate of surplus value in Great-Britain.

The rate of surplus value has been calculated as follows: starting with it classical formulation: Surplus Value / Wages, or: (NGP – Wages) / Wages, we have divided each term of the aforementioned expression by the wages. This results in: (NGP / Wages) – 1. By subsequently dividing the numerator and the denominator by the number of wage earners, the two determinants of the rate of surplus value are made to appear, labor productivity in the numerator and the real wages in the denominator: (NGP / Wage Earners : Wages / Wage Earners) – 1. In other words: the rate of surplus value = (Productivity / Real Wage) – 1. Its evolution depends thereby from the respective relationship between the variations of labor productivity and those of the real wage: if labor productivity increases more rapidly than the real wage, the rate of surplus value increases, and inversely. This approach permits to make the two essential determinants of the rate of surplus value appear, and to escape from the delicate bookkeeping decisions posed by the calculation of the Gross Domestic Product (GDP) and the wages over long periods, by relying on two very solid statistical series that constitute a near consensus among economic historians. Marx had well understood the whole importance of this relative relationship between the growing labor productivity and the increase of real wages, since he discerned one of the possible causes of overproduction crises in their growing mismatch: Over-production arises precisely from the fact that the mass of the people can never consume more than the average quantity of necessaries, that their consumption therefore does not grow correspondingly with the productivity of labour.” (1)

1 Karl Marx, “Theories of Surplus Value” (1863), Vol.2, Ch. 16: Ricardo’s Theory of Profit, [3.] Law of the Diminishing Rate of Profit; [e) Ricardo’s Explanation for the Fall in the Rate of Profit and Its Connection with His Theory of Rent] (Translation by Progress Publishers, Moscow)


Complementary graphs: Gini Indexes for the USA, Japan and Spain

Gini index USA 1774-2013 (Source: Milanovic, 2019)
Gini Index Japan 1895-2011 (Source: Milanovic, 2019)
Gini index Spain 1850-2010 (Source: Milanovic, 2019)