Human beings are inherently social creatures. They possess an innate desire to interact with each other irrespective of geographical boundaries. History is littered with examples of explorers and travelers braving formidable natural obstacles to reach a destination beyond the limits of known civilization. Besides the numerous social, cultural, and political reasons for this urge to travel, establishing contact between different groups of people brings desirable economic benefits in the form of trade. Trade drives the mechanism for growth in classical economics by defining fundamental market characteristics. Unarguably, the concept of trade is intimately linked with the prosperity of mankind. The important and often ignored factor is environmental, and more specifically geographical, limitations on the ability to trade. Although technology has provided us with the tools necessary to surpass these geographical limitations, human settlement patterns still represent a legacy of environmental constraints.
A traditional economic interpretation of the human desire to travel would characterize the urge as economically rational. The interaction between people of different areas provides the opportunity to exchange surplus production and the principle means of economic growth. This type of economic growth, pioneered by Adam Smith in his seminal work The Wealth of Nations, defines Smithian growth. He stipulates that the chief mechanisms for economic growth are expansion of markets, specialization and division of labor, and accumulation of capital. These mechanisms are fundamentally dependent on trade, which has been historically limited by the environment. Despite the tools provided by technology to push past the boundaries set by tall mountains and vast oceans, the environment inflicts a significant cost on trade. Transporting goods across hazardous terrain necessitates large expenditures of time and capital. Thus human settlement patterns exhibit a tendency to cluster around regions that minimize transportation costs.
The primary effect of trade is the creation and expansion of markets. Markets require the ability to not only exchange physical commodities but also convey important price signals. This type of complex interaction between parties in disparate geographical regions involves travel. If the costs of shipping and traveling prove to be too costly, then markets are limited and unable to grow. Thus crucial determinants of market size and economic growth are shipping and traveling costs. These costs are a function of existing technology and environmental restrictions. Over history, humans have proven extremely sensitive to these limitations and successfully settled in regions that minimize these costs.
The Phoenicians, Minoans, Greeks, and Romans exemplify this human reaction to travel limitations posed by the environment. During classical times, the single-square mainsail ship provided the cheapest and most reliable form of transportation (Mokyr, 24). Given this known level of technology, the Mediterranean provided a geographically-gifted region in terms of trade. The close proximity of various islands with the coast and relatively calm waters provided Mediterranean civilizations with the ability to link together disparate markets, given the level of technology. Similarly Adam Smith argues that easily navigable inland channels stimulated the growth of China, India, and Egypt. “It is remarkable that neither the ancient Egyptians, nor the Indians, nor the Chinese, encouraged foreign commerce, but seem all to have derived their great opulence from this inland navigation.” (Smith, 1.3.7) Historically and theoretically, environmental barriers pose significant restrictions on market growth through the cost of travel. The human response to this limitation has been to develop in geographically advantageous regions.
The specialization and division of labor present another effect of environmental limitations on economic growth. “When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for.” (Smith, 1.3.1) As the size of the market is largely determined by geographical constraints given a level of technology, the specialization and division of labor is also restricted by the cost of traveling. An illustrative example of this relationship stems from the study of the British Industrial Revolution. Prior to its Industrial Revolution, England’s mostly agrarian economy fails to distinguish itself from those of continental Europe. A compelling explanation for England’s lead in industrialization stipulates that England possessed a larger percentage of land capable of producing fodder crops such as oats, clover, alfalfa, and legumes. This allowed the English to substitute mechanical and animal inputs for labor inputs in agricultural production. On the other hand, in places like France high population levels and arid climates were unsuitable for fodder crops thus favoring increased agricultural productivity with labor inputs. Overall then, the English agricultural system released labor necessary for the Industrial Revolution while other agricultural systems absorbed excess labor.
While the geographical argument for England’s agricultural endowment highlights the long-term effect of environmental factors on economic growth, the implication of geographical constraints on economic growth in terms of travel form a significant part of the argument’s foundation. “…The reallocation of land from the cultivation of food grains into fodder crops would have been more difficult, unless the transport and distribution system had promoted regional specialization through higher level of internal trade in animal feedstuffs. All the available evidence points, however, to superior level of inter-regional commerce within Britain—a country persistently favored by lower densities of population to land for centuries after the Black Death.” (O’Brien, 223) Devoting certain members of the population to the production of one item requires the ability to provide the specialized producers with a necessary consumption bundle. Wage laborers in English cotton mills during the Industrial Revolution could not have existed without their ability to cheaply distribute products and transport food. As defined previously, distribution and transportation costs are a function of a given level of technology and geographical restraints. During the British Industrial Revolution, shipping technology provided the means to establish a truly global economy. This era heralded a historic shift in the effects of environment on transport. Relatively cheap shipping costs allow for regional economies, such as the Lancashire cotton industry, to specialize in producing a certain product. Over time, such regions develop into a nexus of transport and production as further specialization and division of labor occurs. Thus the legacy of geographical limitations perpetuates through positive feedback loops.
Capital accumulation presents the third mechanism for Smithian growth and it provides an additional force that perpetuates the effect of geographical restrictions on travel. As economic activity is driven by the pursuit of profits, increased economic activity due to the above factors necessitates the increase in capital accumulation. This increase in capital accumulation amplifies the long-term effects of geographical restrictions on settlement patterns. Furthermore, the specialization of labor in centers of regional commerce shifts investment toward these cities. Hence, capital accumulates in these regional centers and magnifies the legacy of geographical constraints on travel. Capital accumulation provides higher capital to labor ratios increasing labor productivity in these geographically-gifted areas. In addition to being a nexus of transport and production, these cities become centers of finance reinforcing their position. Understandably, these geographically-based models seem deterministic. The Smithian analysis of the human impulse to travel does not predict that geographical endowment determines economic prosperity. The analysis merely highlights important relationships between geographical constraints and the economically rational human.
Today, technological innovation seems to have conquered the geographical restrictions on human travel. Airplanes, trains, trucks, and ships provide the technology necessary to ship goods for cheaper than ever before. However, the impact of environmental limitations on human travel is not a relic of the past. Most major cities possess a historical legacy as a center for regional trade. These centers of trade evolved around regions designed to minimize the costs associated with transport and travel in the past when geographical constraints presented a more imposing barrier. New York, Tokyo, London, and countless others provide evidence for current settlement patterns representing a legacy of geographical barriers. |
