This history of the economy in many ways is quite simple. The numbers below are approximated and a bit of a mash-up taken from several sources to illustrate trends and shifts in our economy.
The economy has undergone significant changes over the course of the last 10,000 years. Generally, these changes can be divided into three distinct phases: the traditional economy, the command economy, and the market economy. The traditional economy, which existed for the majority of human history, was based on bartering and subsistence farming.
The command economy, which emerged during the industrial revolution, saw the rise of government control and planning in economic activity. Finally, the market economy, which has been dominant since the 18th century, is characterized by the use of money and the presence of a market in which goods and services are exchanged.
Here’s a brief 10,000 year summary of the economy in North America and to a certain degrees the Western Hemisphere. Since the dawn of civilization, there have been three drivers of wealth and job creation in the economy. The Agrarian Age, The Industrial Age and now the Creative Age.
The Agrarian Age
For the first 10,000 years of civilization employment and wealth creation was primarily tied to agriculture. At the turn of the 20th century roughly 60% of the labour force was directly or indirectly tied to Agriculture – as a result of innovation, shifts in the economy, the industrialization of agriculture, mechanization and productivity gains that number is now is just below to 2%. This snapshot occurred during the transition from the Agrarian Age to the Industrial Age.
The Industrial Age
By the mid 20th century the tides had shifted. Just as the labour force had peaked at 60% during the Agrarian Age, approximately 50% of the labour force was employed in manufacturing during the Industrial Age, currently that number is just below to 12% due to the recession, automation, global shifts, labour costs and off shoring! This snapshot occurred during the transition from the Industrial Age to the Creative Age.
The Creative Age
Today employment in the Creative Age is approximately 35% where it was only 5% at the turn of the 20th Century. In other words people who are paid to think represent 35% percent of the labour force. Creative class jobs are expected to grow by about 40% over the next decade or so.
As we moved from the Agrarian Age to the Industrial Age employment growth and and wealth creation shifted from one to the other, now we are seeing a similar shift again. If we want to see our communities prosper, we need to make sure we are focused on future economic growth opportunities versus ones from the past.
The previous wealth drivers don’t disappear they just diminish in their importance and contribution to wealth creation and employment, while making room for new ones.
In a recent talk I gave, I asked people to imagine that we were at the end of the agrarian age and the beginning of the industrial age and we could choose to invest further in building a better buggy or a building a new buggy – the automobile. If you invested in the better buggy you would be out of business, if you invested in the automobile you would have been as wealthy as Detroit was at its peak mid 20th Century.
We are now in the same crosshairs of time. We are at the end of the industrial age and the beginning of the creative age. If you are building an economy and community are you going to bet that industrial based manufacturing is going to carry the day or that knowledge, innovation and technology-driven companies is where the future economy is heading. We have a bit of a crystal ball here.
I don’t know about you but I am betting on the future not the past! Look what happened to Detroit they missed the shifting trends and are still paying for it today vs. Silicon Valley who is still capitalized on the shifting trends.
What do you think? Please comment with related links and thoughts.
Brief Background & Bio
As economic development officer, I pioneered the practice of Creative Rural Economy, Economic Development in Prince Edward County, Ontario for a decade starting in 2001. Now as the President and CEO of the Greater Peterborough Economic Development Commission and the Greater Peterborough Innovation Cluster my role has expanded to include both urban and rural creative economy work.
I have a keen interest in the economics of urban-rural interdependence. I also speak regularly to groups, organizations and conferences in order to help them grow their economies, in Canada and abroad.
Want to Hear More?
I enjoy sharing my knowledge and expertise to help others on developing Creative Economies – Rural, Small Town & City. To book me for speaking engagements, facilitation, workshops and more click here or email here.