Keith, I don't see Pete putting the cart before the horse. Economic progress,
or whatever one should call it, results from the assembly of new productive
pieces and the discard of old and no longer useful ones. The long shift from
medievalism to modernity involved many different processes and trends, the
provision of infrastructure to support rapidly growing cities and expanding
frontiers being one of them.
I don't see emulation of the upper classes by the lower classes as being
growth's primary historic driver. When living in the countryside before the
industrial revolution people grew their own food, built their own shelter, and
made their own clothing. This was no longer possible following the movement to
cities. They had to buy whatever they needed, and they bought what they could
afford. If they could afford it, they bought products of a higher quality,
perhaps partly because they were emulating someone higher up on the social
scale, but mostly because it made life easier.
In a previous posting I commented on the role of advertising and credit in
today's world. Advertising has been with us for a long time and has, I
believe, been instrumental in prompting people to consume and hence in driving
growth. Consumer credit is a more recent phenomenon. It allows people to
consume beyond their means in the hope that they will be able to pay for
present consumption tomorrow. Given that growth is being driven by advertising
and credit as well as real need, one has to wonder where it may be taking us.
One also has to wonder about other growth components such as militarily and
politically based spending decisions.
I think I'd better stop now. I've arrived at the point at which I have to
wonder if growth really is a good thing and that's not good for someone who's
supposed to think like an economist.
Ed
----- Original Message -----
From: Keith Hudson
To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION
Sent: Saturday, October 02, 2010 5:13 AM
Subject: Re: [Futurework] Not a very positive picture
At 13:49 01/10/2010 -0700, Pete Vincent wrote (in a civilized and non-abusive
way):
On Fri, 1 Oct 2010, Keith Hudson wrote:
> Apart from the necessary supply of increasingly cheap fossils fuels, the
> industrial revolution (that is when the idea of "economic growth" emerged
> and GDP has been worshipped) depended foremost on the mass production of
> what were originally hand-made luxury items enjoyed by the land-owning
rich
> of the agricultural era. Despite what Marx and Engles said about the
> increasing impoverishment of the factory workers they were, in fact,
> prospering all the way through the 19th century and most of the 20th. As
> each new consumer product, hitherto expensive (cotton clothing, porcelain
> pots, curtains for the windows, bicycles, etc) became cheaper in
successive
> swathes then, with hard saving at each stage -- the professional
> middle-class (see Samuel Pepys diaries), then the middle-class, then the
> working class -- became a cornucopia flowing downwards, and a whole
> population working hard and aspiring upwards.
[PV]
I'm finally moved to comment on this thesis. If I were to contemplate
the arc of the western prosperity flowing from the industrial
revolution, I would pinpoint the key drivers as being a synergy of
several. Obviously key are the extraction of high energy content
fossil fules, first coal then oil, in combination with the development
of devices to extract and exploit them for motive power and ancillary
applications, particularly smelting. But what I would identify as the
key additional factor which catalyzed the advance of wealth is the
simultaneous advent of vast open frontiers, offering the opportunity
of carte blanche application of the new technologies and accompanying
explosive population growth. At the same time, intellectual freedom
led fairly directly to great advances in public health and sanitation,
which brought about such an improvement in the living conditions of
the already "fully" populated regions of the world that it was the
virtual equivalent of the opening of another frontier, in terms of
the resulting increase in population.
All this growth and expansion provided the main wealth driver, not
in consumer goods, but in major industrial production for housing,
transportation and commercial infrastructure: steel rails and girders,
brick, concrete, and asphalt; multistorey buildings, highways, bridges,
ships. I suggest that an entire absense of consumer products may not
have caused a substantial reduction in the overall arc of productive
activity and accompanying growth of wealth (if we consider housing
to be distinct from consumer goods). You can consider the automobile
a consumer good, but in its absense, an equivalent flourishing of
public transportation would necessarily have resulted.
In my view you are putting the cart before the horse. Infrastructure follows
industrialization-consumerism (apart from the minimal industrial infrastructure
paid for privately). Typically in a developed modern economy, consumer spending
accounts for 65-70% of GDP; infrastructure 15%. Consumer spending supplies
immediate profits, part of which can be re-invested soon afterwards. There's no
doubt that infrastructure spending supplies extremely important long-term
benefits, but it is smoothed-out over the nation as a whole and supplies no
specific financial surpluses.
When political parties present their manifestos at election times they speak
to the selfish class interests of the electorate and, increasingly in recent
decades, to the sub-classes within them. Politicians don't present
infrastructure projects at the top of their lists because they know that it is
the immediate interests of the individual and his family which, added together,
supplies the national motivation which can also pay for infrastructure as a
byproduct. Stalin and Mao Zedong with their concentration on heavy industry
made the bad mistake of trying the infrastructure-first route, and both the
Soviet Union and China failed as a consequence -- the former collapsed, the
latter became moribund.
The irony of all this is that when consumerism is in full spate (e.g. England
in the 19th century, China and Russia today) -- even with low levels of
taxation -- then abundant local and state infrastructure (physical and welfare)
can be relatively easily laid down out of the general prosperity. Today, with
few, if any, uniquely new consumer products (only embellishments of 20th
century ones) to motivate their electorates, all advanced governments are
deeply in debt and cannot even maintain their existing infrastructures from
taxation, never mind extending them.
Keith
Keith Hudson, Saltford, England
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