Forecasting the future builds largely on past events. Historical experience has seen the transition from predictions made largely on fanciful speculation and fear to those built on increasingly sophisticated models. As we confront the twenty-first century, it is useful to draw on past experience to gain a sense of how well our forecasting skills have come and how much remains to be accomplished.

Early forecasting evolved largely from a concern with celestial mechanics. The first challenge was to comprehend the movement of the planets and stars. As the heliocentric theory put forth by the Polish astronomer Copernicus took hold, efforts shifted toward refined measures of the earth's rotation, the determination of global time zones, and the expansion of corollary knowledge of the human and physical environment. Since most societies were still largely dependent on agriculture, the idea of making economic predictions was still considered secondary to the realm of the natural sciences.

With the growth of the global economy and the emergence of the industrial revolution, we witness the rising importance of economic prediction to economic policy. As this transition occurred in Europe in the 18th century, economic writing combined moral advocacy with efforts to understand the interconnections of the global economy. Adam Smith (1723-1790) who first wrote The Theory of Moral Sentiments in 1759, produced his well known The Wealth of Nations in 1776. Neither work constituted an effort to make economic prediction but each provided the foundations of economic analysis that would be essential to the crafting of economic forecasting.

Smith's legacy became clear as England wrestled over the question of protectionism following the end of the Napoleonic wars in 1814. On one side was Thomas R. Malthus (1766-1834), who first became known for his Essay on Population (1798). Malthus' Essay was one of the first works by an economist to delve into economic forecasting and his stern conclusions led the English historian Thomas Carlyle to characterize economics as the "dismal science". The other side of the trade question was taken up by David Ricardo (1772-1823), a successful London stockbroker who first enunciated the principle of comparative advantage as the basis of international trade in his 1817 book, Principles of Political Economy and Taxation. While Ricardo's ideas led England to embrace international trade, economists continued to fret over the question of diminishing resources.

A second example of economic forecasting was provided by William Stanley Jevons (1835-1882), a mathematician who turned his efforts to economics. In 1865 Jevons wrote The Coal Question, in which he predicted that at current rates of consumption, England would run out of coal in approximately 100 years. His prediction did not come true, partly because he had not anticipated the role of technological change and the extent of resource substitution from coal to oil and natural gas. Indeed, he may have been surprised to learn that England would one day discover substantial quantities of oil and natural gas in the North Sea.

A third example is the debate over the causes of and solutions to the Great Depression of the 1930's. Neoclassical economists contended that the economy had self-correcting mechanisms that would restore full employment. As the Great Depression wore on, it inspired John Maynard Keynes to write The General Theory of Employment, Interest, and Money (1936), in which he argued that only an activist fiscal policy using deliberate government budget deficits could restore an economy to full employment. Keynes' ideas held sway for several decades, but have lost their original appeal as improved understanding of economic dynamics has evolved to produce alternatives to discretionary fiscal policies.

Even as economic knowledge has expanded, it has not diminished a dismal following within economics as to economic growth. In 1972, the Club of Rome produced The Limits to Growth, which was a restatement of Malthusian themes combined with an elaborate computer model. That this book came out one year before the energy crisis of 1973 led many to conclude that the world economy had once again come against inexorable limits to growth.

What is interesting from these examples is how economic growth has continued despite a stream of dire predictions. One answer to this phenomenon is that where pricing systems are efficient, they can enable a shift of resources to their most productive uses. A second answer is that technological change continues to advance in ways that few have been able to predict with great accuracy. As a result, where they indeed may be limits to growth, the world has managed thus far to enjoy rising standards of living with greater life expectancy than at any time before in history. Y2K concerns notwithstanding, the new millennium offers continuing prospects for renewed economic growth. 

1. Throughout the world, life expectancy around 35-40 years . Global population did not exceed 500 million until the 16th century, with high birth and death rates through warfare, starvation and disease keeping population from growing very rapidly.

2. Most societies lived in rural areas, with cities serving initially as centers of religious and political importance until commerce stimulated their expansion. Until the 18th century, no city in the world exceeded the 1 million level achieved in ancient Rome. Governments were largely autocratic, based either on a system of feudal privilege, or on the invocation of religious authority. The Papacy in Europe viewed its power as both spiritual and temporal until the rise of nationalism created challenges and eventual separation of powers. The Magna Carta signed by King John I of England in 1215 and the convening of the first Estates-General in France by King Philiippe IV in 1302 marked the earliest beginnings of parliamentary government and the notion of limited powers of the sovereign.

3. Economic activity was driven largely by agriculture, at first largely self-sufficient production, and gradually through an expansion of trade. Industry was limited to the production of basic tools for construction and military weapons. Gunpowder, which had been developed in China, did not reach Europe until the late 15th century. Property and civil rights, which had early beginning in ancient Babylon, Greece and Rome, were largely in disarray throughout the world at this time, with systems of law relying largely on custom.

4. Literacy was relatively low throughout the world, accounting for no more than 2 to 5 percent of the adult population. China, India, and the Sumerians had developed some of the earliest systems of writing, followed by the Phoenicians, Hebrews, Greeks, Romans, Mayans, Ethiopians, Arabs, and other cultures. Religious texts in Latin preserved minimal literacy in Europe, until the growth of knowledge led to the rise of secular languages.

5. Food animals included duck, chicken, pigs, sheep, and various species of fish: eel, pike, minnows, trout, and lamprey, with some fishing expeditions in offshore waters.

6. Vegetables were sparse: no known consumption of broccoli, cauliflower, runner beans, brussel sprouts, potatoes, or tomatoes; No sugar consumption - only honey. In Asia, rice cultivation began to emerge as a major food staple, but did not expand into Europe until centuries later.

7. Beverages: no known consumption of tea or coffee in Europe; limited wine and spirits often prepared by monasteries in Europe and where mead was a common beverage. Coffee was first cultivated in Ethiopia, then spread to Yemen, and the Middle and Far East. Tea was already under cultivation in the Indian sub-continent and in China, where varieties began to be cultivated for their medicinal value.

8. Chess, an innovation of Middle Eastern origin was played increasingly in Europe; card games had not yet emerged. Other games included variations of stone tossing and ball throwing. Warri is an ancient stone board game from Sub-Saharan Africa. The Aztecs of Central America developed early ball throwing games.

9. Capital punishment by hanging in public arenas, with bodies left to rot and be consumed by vultures. Ritual sacrifice, largely absent in Africa, Europe, the Middle East, and in Asia, did take place in the Americas, notably among the Aztecs and the Incas.

10. Metal coins were in circulation, especially following the revival of commerce following the European Crusades to the Middle East; China already had begun the use of paper money.

11. The spread of the Arabic numbering system after 976 A.D. fostered the use of zero in calculations. China had already perfected the use of zeros with the introduction of the Abacus.

12. Glass windows were largely a rarity; found in Europe mostly in religious buildings; elsewhere more frequent though far from common. Energy consumption consisted largely in the use of fuelwood, though there were signs of the use of coal (in England), and natural gas (in China).

13. World armies relied largely on foot soldiers with bow and arrows, lances, and swords. Mounted cavalry emerged with the domestication of horses in significant and survivable numbers, and were used by the French in the Norman invasion of England in 1066.

14. Medicine was largely primitive, and relied often on a combination of folklore, witchcraft, and superstition. The Persian scholar Avicenna developed one of the earliest treatises on medicine, and was used until the 1700's, when it was replaced by more advanced understanding of human anatomy and the nature of disease. Bloodletting through leeches or other devices was common and persisted until the late 18th century in Europe.

15. The measurement of time and the emergence of regular calendar dates was subject to great imprecision. Clockmaking, an innovation in Europe in the 13th century, gradually replaced sundials.

16. Scientific progress was driven initally by the urge to master an understanding of celestial motion, thus permitting more accurate measures of time. Belief in a flat world persisted until more extensive land and sea travel suggested otherwise. Still, the absence of a meridian system of global time measurement prevented the emergence of a more precise measure of nautical navigation, and was remedied only with the innovation of Mercator in the 16th century. 

1. The revival of commerce, which unfolds unevenly, produces changes in the political and economic landscape. The Ming rulers of China initially authorize Admiral Zheng He to conduct voyages of exploration that between 1412 and 1425 extend from the Indochinese peninsula around the Indian sub-continent, the Arabian peninsula, to the East Coast of Africa, and whose boats of up to 400 feet in length were unsurpassed by any society in the world at that time. European exploration was motivated by efforts to locate a direct seaborne trade route to the Indies. Stimulated by the Crusades to the Middle East that began in 1095 and ended in the 13th century, and by the voyage of Marco Polo across the Eurasian steppe to the Mongolian empire of Kubla Khan in the late 13th century, growing European interest in spices grown in India and Southeast Asia led eventually to the great voyages of discovery by the Spanish and Portuguese: Christopher Columbus and his trans-Atlantic voyage of 1492 to the Americas; Bartholomeo Diaz, who reached the Cape of Good Hope in 1497, Vasco da Gama who reached Calicut in India in 1498, followed by John Cabot to Newfoundland in 1497, by Jacques Cartier to the St. Lawrence river valley in 1534, by Ferdinand Magellan (1480-1521), whose fleet made the first voyage around the world in 1521, even though he perished in the Molucca Straits of the Philippines.

2. As global exploration expanded, so too did scientific knowledge. Gerardus Mercator (1512-1594) developed in 1569 the first globe that provided accurate fixed point measurement of longitude and latitude, thus permitting more accurate navigation. The sextant was developed to supplement the Astrolabe, a stellar guidance system developed by the Greeks and used extensively by Arab sailors.

3. Progress in astronomy, through more accurate measurements and the development of telescopes, led to a rejection of the old Ptolomaic flat earth-centered theory to one in which the earth was seen as one of several planets circumnavigating the sun in semi-regular orbits. Improved observations led the Polish astronomer Copernicus (1473-1543) to advance this new theory, and which was corroborated by the Italian astronomer Galileo (1563-1642) with his telescope, even though he was forced to recant his position by the Catholic Church at the time. Johannes Kepler (1573-1630) determined the laws of planetary motion in the 17th century, which led to further precision in measurement. Wilhelm Leibnitz (1646-1715) and Isaac Newton (1642-1727) developed in his 1687 treatise Principia Mathematica the calculus to aid in the determination of scientific measuremen, and which laid the foundations of statistical tools that would become central to the development of forecasting in the natural and social sciences later on. Meawhile, the Dogon of the Kingdom of Mali, continued to practice a rite involving the once every 200 year appearance of the comet Sirius, affirming the broad interest in astronomy, much as Maharaja Sawai Jai Singh (1699-1744) of India built in 1727 one of the first observatories in India in the city of Jaipur.

3. Global population slowly began to rise, as trade and improvements in agricultural and industrial technology produced perceptible increases in the global food supply. The rate of global population growth was less than one-half of one percent per yet, as warfare and disease continued to keep population growth in check.

4. Dietary intake throughout the world changed with the emergence of new sources of products. To Europe came imports of coffee, tea, sugar, indigo, maize, peanuts, potatoes, sunflowers, tobacco, tomatoes, and vanilla, in addition to an array of tropical spices. To the Americas, Africa, and Asia came imports from Europe of different clothing styles with buttons, clover, dandelions, firearms, peach treees, thistles, and the Roman alphabet. And, just to redistribute disease, Europe imported syphilis from the Americas while exporting smallpox in exchange.

5. Political regimes evolved in response to changes in economic wealth and social pressure. Europe witnessed the rise of nation-states that moved to separate religious form secular authority, and which laid the foundations for more representative government. The savannah kingdoms of West Africa went into relative decline as new trade patterns, including the trans-Atlantic slave trade, were established along the African coast. China, like Japan, adopted largely inward economic policies that produced refined streams of aesthetic works but in which technological innovation remained largely stagnant from the global leadership position that China in particular once held.

In the meantime, the Middle East fell under the domination of the Ottoman Turks. The Turks themselves had been invaded at the time of the Mongol expansion of the early 14th century, and organized a vast commercial empire that produced regional political stability with frontiers extending from southeast Austria to North Africa, and southward down the Red Sea Coast as far as Zanzibar. Symbolic of the Turkish conquest was the Ottoman capture of Constantinople in 1453, even though a Venetian naval force repulsed the Ottoman navy at the Battle of Lepanto in 1571.

Beyond the Mediterranean, Persian invaders established Moghul rule in India, producing an initial extension of Islam to the region that was later blended with elements from Hindu beliefs. This transformation reached its apogess under Akbar of India (1542-1605), who in 1556 became the first Mogul emperor of India. In the architectural realm, following the untimely death of his wife, Shah Jahan (1592-1666) ordered the construction of the Taj Mahal (1631-1648) for his widow Mumtaz (d.1631), considered to be one of the most elegant works of architecture in the world. As European colonization expanded into the Americas, once substantial empires of the Aztecs and the Incas fell into decline. Pre-Columbian American civilizations had known periods of prosperity, such as the Mayan and the Nacza, but also went into decline as European expansion occurred. Apart from religious converson to Catholicism, European expansion in the Americas also brought a revival of some Native Amerian societies, notably the Plains Indians of North America, for whom the Spanish introduction of the horse revived their hunting efficiency. In southeast Asia, the Khmer empire reached its apogee in the buildings at Angkor Wat, then began a slow period of relative decline and economic and political power shifted to more global trading areas.

6. Financial innovation in Europe served to complement the technological and industrial innovation already under way. The Dutch and the English were pioneers in the development of joint stock companies, and quickly challenged the Spanish, who held an initial economic lead. The defeat of the Spanish Armada by ships of Queen Elizabeth I(1533-1603) in 1588 under Edwin Drake marked the supremacy of North European countries in the expansion of global commerce and power. Still, most countries, including those in the Middle and Far East as well as in Europe, adhered to a crude mercantile theory of trade in which state trading monopolies and the goal of accumulating precious metals in a balance of trade surplus was seen as good in itself. This short-sighted view came into question gradually as Spain experienced hyperinflation from its extraction of vast sums of gold and silver from its New World colonies in the 16th century, but more sophisticated understanding of economics would have to wait until the 18th century, by which time the ideas of Adam Smith(1723-1790) would transform the level of knowledge.

7. Trans-Atlantic trade involving Europe, Africa, and the Americas produced vast movements of goods, technology, as well as the revival of slavery. Where slavery had been dying out in Europe, the trans-Atlantic slave trade occurred as Europeans established vast plantations for the cultivation of tobacco, cotton, coffee, and sugar. Only toward the end of the 18th century did both technology and a growing moral revolt produce resistance to the slave trade, as witnessed by the religious efforts of such figures as William Wilberforce in England in the 1770's, and by the revolt of Toussaint L'Ouverture in Haiti in 1803 against the French. While the United States had become independent from Great Britain by the Treaty of Paris of 1783, its constitution of 1787 perpetuated slavery for decades to come until the Civil War of 1861 led finally to its prohibition. As Latin American countries achieved political independence in the 19th century, they also gradually embraced the abolition of slavery, with Brazil implementing prohibition in the 1880s. Slavery in Sub-Saharan Africa continued on a lesser scale, to some extent by local powers, and to some extent by Arab merchants engaged in commerce in East Africa. 

1. The rise of the modern world has been shaped largely by the industrial revolution, or the series of industrial revolutions that began in Europe in the 18th century. Beginning first with the adoption of mechanical inventions such as the 1733 flying shuttle of John Kay (1704-1764), the 1764 spinning jenny of James Hargreaves (1720-1778), and the 1763 adaption of the steam engine to coal mining by James Watt (1736-1819), Europe began to achieve levels of production significantly in excess of population growth. Population growth rates expanded, though not as fast as economic production, with the result that per capita incomes began a process of expansion that has continued off and on ever since in which economic growth is almost taken for granted.

2. Although technology was critical to industrial revolution, so too was the rise of international commerce on a global scale. Where regions once functioned in relative isolation, international trade became an important vehicle for economic growth. In Europe, the role of international trade became clearer in a series of debates following the end of the Napoleonic wars in 1814. At that time, England had been forced to revert to relative self-sufficiency, thus threatening the gains once available through trade that had fostered its initial advances in industrial technology. Thomas R. Malthus (1766-1834), who became known for his dismal Essay on Population (1798), defended in his book, Political Economy (1814), the importance of maintaining protective tariffs while stimulating domestic consumption as the route to continuing economic growth. David Ricardo (1772-1823), whose 1817 book, Principles of Political Economy and Taxation took the opposite position, an defined the principle of comparative advantage as the basis of international trade. England accepted Ricardo's ideas with the abolition of the Corn Laws of 1834, and went on to enjoy decades of economic supremacy as the industrial revolution continued to expand.

Despite the shift of European countries toward international trade, not all areas moved at the same rate. Part of the reason is tied to the fact that European countries in the latter part of the nineteenth century used military force and occupation to ensure the movement of goods and services, as symbolized by the Scramble for Africa that began following German Chancellor Otto von Bismark (1815-1898) convened the Congress of Berlin in 1885 to determine international spheres of interest. While the slave trade was repressed in Africa with this new expansion of European power, the fact that European powers used military force made the benefits of trade less obvious. This was equally true as the U.S. sent military forces to occupy the Philippines(1899) and Cuba(1898) with a stated objective of liberating them from Spanish rule while at the same time establishing effective U.S. control. That the U.S. also had used the threat of military force when Commodore Matthew Perry arrived in Tokyo Bay in 1853 was not lost on the Japanese when they came to shape commercial policy following the Meiji restoration of 1868, nor on the Chinese at the time of the Boxer rebellion in 1900 when military force also was used to secure the release of missionaries who had set out to convert local populations to Christianity. Thus, the use of military power to achieve commercial aims clouded the potential benefit that international trade could deliver, a fact that became even clearer as both World Wars I (1914-1918) and II (1939-1945) were fought in part precisely over such economic issues.

3. With the end of colonial regimes in the 20th century that began with Indian independence in 1948 and continued in the Middle East, Asia, and Africa through the 1960s', the world gradually moved toward new systems of international governance. While the United Nations symbolizes the political dynamics of international change, GATT (the General Agreement on Tariffs and Trade) and its newly founded successor organization, WTO (The World Trade Organization) embody the economic dimensions. As countries engage in successive rounds of international trade negotiations, there must be demonstrable benefits to all concerned if the process is to move forward in a mutually satisfactory way.

4. Despite world wars that have produced as many as 100 million fatalities in the 20th century, science has continued to progress. Life expectancy continues to rise as new understanding of health and disease evolves. Progress in health in developing countries has resulted in a demographic explosion that once again has raised the Malthusian specter of mass deprivation. An early example was put forth by the economist William Stanley Jevons (1835-1882), in his 1865 essay, The Coal Question., Jevons suggested that at current rates of consumption, England would run out of coal in less than one hundred years, an outcome that still has not happened as new resources and technologies have unfolded. Such thinking prompted English historian Thomas Carlyle, upon reading Malthus' Essay on Population, to label economics "the dismal science", a phrase that has remained in use ever since.

A more recent example of Malthusian economics is the forecast put forth by the Club of Rome in its 1972 study, The Limits to Growth. Like Jevons' 1865 essay, the Club of Rome study was predicated on forecasting growth and collapse in the consumption of natural resources, with ultimate declines in per capita income. Once again, technology is an important dimension of forecasting the future, as is the role of efficient markets in the allocation of resources. As a third example, how economies work has received much attention since the Great Depression of the 1930s. As the depression wore on, John Maynard Keynes(1883-1946) wrote his famous 1936 treatise, The General Theory of Employment, Interest, and Money, in which he advocated the use of discretionary fiscal deficit policy to ensure full employment. Keynes' ideas held sway throughout the next several decades until it was clear that government could also produce extended inflationary pressures that were inimical to sustainable economic growth. As the century draws to a close, no one can rule out the possibility of a return to another Great Depression. What is remarkable is how the progress of economic knowledge is resulting in reducing this likelihood, much as the pace of financial innovation generates new ways of managing one of the enduring issues of economic growth, namely the prudential management of risk.

5. Global economic transformation can also produce enormous changes in the distibutionof income. As Karl Marx (1818-1883) noted in The Communist Manifesto of 1848 and in Das Kapital of 1867, the embrace of market capitalism can produce dramatic effects, as symbolized by the living and working conditions of urban England. What societies need to examine is how much inequality is necessary to achieve a satisfactory rate of economic growth. This is not a simple economic question, but one in which each society must choose what kind of social contract it wishes to establish. What is essential in making such a choice is a clear demarcation of the trade-off between growth and equality, a step not always made clear to those who advocate either growth alone or equality alone. For countries seeking to enjoy the economic benefits of globalization, there is often an underlying fear that they can not hope to benefit, and thus turn to inward policies that may produce greater equality but often a reduced rate of economic growth. What makes this more complicated is that corruption is inversely related to economic freedom, which in turn is directly related to economic growth. Thus, the question is driven partly by whether to drive a truck carrying a camel, or to ride the camel itself. 

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