Most economists today are just like revivalist preachers. Each of them has
his own patter of abstract ideas, can write or talk about them for
thousands of words at a time and can point to whatever biblical text (in
this case economic data) that happens to be convenient to them. Almost any
one of them can be convincing when in full spate but few of them actually
explain how economic growth actually comes about -- and thus could be
safely stimulated in times of depression.
Once the iniquitous Corn Laws were repealed in 1846 and the working man of
England was able to eat cheaply from imported grain, economic growth became
increasingly taken over by a motivation stronger than mere physical
survival and baby-making. He not only desired smaller and smaller families
but he also started to join the world of the previous land-owning
aristocracy, the merchant, the lawyer and the banker where status was
principally denoted by the possessions they could display -- their grand
houses, their estates, the objects of beauty in their houses, the number of
personal servants they could employ.
For the working man, the status objects were modest to start with --
curtains for the windows or a Wedgewood pot for the shelf, even an
additional suit, hat or dress for Sunday best -- but, as innovation
continued apace, a whole chain of consumer goods opened and lengthened in
front of him and his wife.
Each new consumer good as it appeared -- the week's holiday at the seaside,
the family photograph album, the bicycle -- was extremely costly. They were
first snaffled by the new rising middle class, more directly aping the
previous elite class. But the profit margins of these goods were such that
they could be re-invested in the next set of consumer goods and,
increasingly, all these status goods could be mass produced and become
cheaper from year to year, working their way down the social ranks of society.
Gradually, the proportion of the weekly wage spent on non-necessary, status
goods, rose . . . and rose . . . and rose. And still the chain of status
goods extended -- the radio, the telephone, electric lighting, even a
little house of one's own. Status competition by means of possessions was
taking place from the top to the bottom of society and according to varying
degrees of ambition. Most were not highly ambitious but still felt they had
to justify their place in their local society -- "keeping up with the
Joneses". Peer pressure, in other words. It's the very rare individual who
can hold out against this, particularly when pecking order is so strongly
embedded in the genes of all social mammals.
Of course, not all of the new household or personal possessions were status
objects. Some were labour-saving, some were for entertainment (though there
was room for status competition within these also) and some (e.g. the car
-- of different status grades, however!) became necessities in due course
as the new highly stratified urban society of work and habitations adjusted
itself to where we are now.
However, the great chain of new consumer goods largely came to a halt about
20 or 30 years ago. The last one was the personal computer. This didn't
quite make the grade as a mass status product (only about 50% penetration),
though it's likely to in the coming years in the guise of a much beefed up
mobile phone. There are all sorts of apparently wonderful things coming
along, such as 3D television, but this, like flat screen TV, is only an
embellishment. Consumers are not going to save up for years to buy it, as
they did for their original purchase. Pretty well every consumer product of
the 20 or 30 years have been marginal improvements or embellishment or
fashionable variations of pre-1980 ones.
Besides, most of us haven't the sensory equipment, or the time or energy or
space to use or possess any more than we have already. It's no wonder
therefore that, for the last 20 or 30 years, the retail sector of the
economy -- and banks and governments -- have become increasingly desperate
to keep economic growth going by means of increasing our personal credit.
How to emerge from the Western credit-crunch? It won't be by throwing yet
more money into the economy. Keynesian methods might have worked in the
1930s because there was still a whole slew of status goods which the
middle-class were buying but which the ordinary working people had not yet
saved up for and bought.
But Keynesianism -- quantitative easing -- money-printing -- hasn't worked
so far since the disaster of 2008/9. It has been captured by the banks in
order to repair their balance sheets (far from restored so far) and none of
it has emerged into the general economy. But even if it had done, there's
no guarantee that there's anything like the chain of status goods which so
motivated the masses for 200 years. Besides, most mass status goods are so
very very cheap these days due to automation and hyper-mass production
mainly. Manufacturing profit margins for all consumer goods are only a
fraction of what they used to be for most of the 1780-1980 period. The mass
of money that was constantly rolling forward for re-investment into the
next tranche of consumer goods previously no longer exists.
There can be no guarantee that any more money-printing by governments will
solve anything at all. Either very little will happen, and the money will
continue to be captured by the banks, or it will spill over into the
economy and cause inflation. This is why some governments are going down
the austerity path and others want to resume money-printing. At the moment
the Western world as a whole is paralyzed with indecision.
Whether the West will experience long-term depression or hyperinflation, it
seems clear to me that the impetus for the industrial-consumer revolution
is now at the very earliest stages of major re-adjustment. In due course,
this will be quite as powerful and radical as that of the changes from the
agricultural era of only about 300 years ago and now.
If time, energy or our sensory apparatus have no margin left over for yet
another tranche of quite new -- and presently inconceivable -- consumer
goods that will pacify the status requirements of the masses, then how will
the new era be motivated? It can only be the development of, and
competition between, producer goods. In view of the decline of oil and
natural gas (and the exhorbitant cost of coal in future years) there can
only be one answer and that is to continue to follow our scientific nose
into quite new areas.
The new scientific area is genetics. This is fully the equivalent of the
work of hundreds of brilliant scientists who took steam power into turbines
and into electricity and thence factory production. And, in view of the
energy crisis, the particular technology that must be developed initially,
is that of manufacturing basic energy, particularly hydrogen. We already
know in outline how this can be done -- neo-bacteria -- and, furthermore,
we already know that DNA methods could produce organic equivalents of
anything that we make today. (The use of DNA to replace present computer
memory chips is already being seriously advocated by some!)
DNA, being as versatile and sophisticated as it is, will require, not just
hundreds of genetic scientists but tens of thousands -- nay hundreds of
thousands -- of teams of scientists, able to live and work closely to one
another, each team specializing in a particular DNA molecule that will
produce a particular consumer or producer good (and able to produce
competitive variants). Instead of trading physical goods with one another
we will be able to trade DNA formulae. As a byproduct, this will almost
undoubtedly cause the formation of much smaller communities than the
grossly large cities we have now.
Status within scientific communities does not depend on an incessant
purchase of new consumer goods. It depends on the talents and reputation of
individuals. Status will take care of itself in the new world. We will, in
fact, resume much the same pattern of life of our hunter-gatherer ancestors
for which our genes are still best fitted.
Unfortunately, although we can already see the signs of the progressive
collapse of this era, and the few faint signs of the next (many research
teams are close to the hydrogen-producing bacterium), 99.99% of the
population have little idea of genetics or the new ideas that will energize
the new process. It will be laughed out of court for a long time to come.
Like the last transition, the new economic era will take a few centuries to
realize.
Keith
Keith Hudson, Saltford, England
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