Thomas,
I've never thought of myself as being in a box, nor have I ever thought of
Keith Hudson as being in one. And I'm very glad that you had a great trip
across Canada with your children. It sounds as though it was a lot of fun.
Keith will want to speak for himself, but I will try to clarify the point I
was trying to make with respect to investment. Investment is simply the
process of building capital. Capital is built, or formed, to make us more
productive. All people, since the beginning of time have built and used
capital. Hunters and gatherers flaked stones into arrowheads or spearpoints
and built dead-fall traps. Even the earliest farmers used some form of hoe,
and as agriculture advanced used oxen and earth-breaking plows. In
industrial society, the water wheel and the coal-fired steam engine are
early examples of capital. In our modern society, we have a vast array of
capital at our disposal. As Jay Hanson points out, our reliance on capital
may well outrun the energy resources needed to sustain it.
Building capital is a kind of chicken and egg thing. To build it, time has
to be taken from other pursuits. The hunter-gatherer had to take time to
make that spear or arrowhead, or to invent that deadfall trap. He could
only do that if he was sure of getting at least as much back from his
artifacts as he put into them. If he got more, he could make better
arrowheads or traps. His main payoff, probably, was time. The more time he
got back, the more time he could spend on making things easier for himself.
Another concern might have been trade. Perhaps he could barter some of his
arrowheads for something made by the tribe down the road - something which
made his life at least as easy as keeping the arrowheads would have.
When our hunter-gatherer lived, the world may have contained no more than a
few million people, spread out over the face of the globe. The capital
available at that time was able to support about that number of people in
reasonable comfort. Now the world contains six billion people. We can no
longer sit around flaking arrowheads. That would not support us. The
capital we require now is enormous, and enormously complex, in comparison
with any previous age. And we are always adding new people, far more each
year than the whole of the early hunter-gatherer population. This means
that we have to continue to build capital and make it more productive just
to support ourselves.
And an important point is that our capital is very unevenly distributed
across the face of the Earth. In Canada, we have lots of it, so life is
easy for us. In your trip across the country, you drove your car
(consumers' capital) powered by gasoline manufactured and distributed using
the producers' capital of an oil company. You stayed in people's houses
(their capital, and partly the mortgage company's). You say your kids swam
in lakes (natural capital? public capital?). Anyhow, you had a great time,
which is good. But in many parts of the world people can't do these things.
The capital simply isn't there in sufficient quantity, or simply isn't there
at all. The people in those parts of the world would want their kids to
sing and dance with joy like your kids do. But the reality is quite
different. When I was in India several years ago, I saw kids that had been
deliberately maimed in order to make them convincing beggars. In Russia I
saw pale young children who should have been in school playing accordions
and violins for a few kopecks.
Capital is not the only answer, but, since time immemorial, it has been the
means by which people have been able to raise their productivity and build
surpluses which have allowed them more options. What happens to those
surpluses is another matter. In a highly monopolistic society, they may
accrue to a relatively few greedy people. In an egalitarian society like
Canada, a substantial part of the surplus is distributed via the tax system
and by other means. If the surplus did not exist, there would be no point
to arguing that we should have a basic income. Quite apart from these
surpluses, the various forms of producers' capital need people to run them.
This creates jobs. The more capital, the more jobs. As a Canadian, used to
high wages, I don't like the thought of Mexicans or Bangladeshis working for
GM or Nike for very low wages, but then I have not asked them for their
opinion. The fact that they vote with their feet suggests that they want
the jobs.
Capital has recently received a lot of negative publicity because, in the
form of the microchip, it has displaced a lot of labour. But it has done
this throughout human history because this, essentially, is its function.
Those people are then free to take other jobs. If they cannot find them,
that is the fault of the society, not of capital.
Hope this clarifies my views.
Ed Weick
