Never mind Margaret Thatcher's famous 'trickle-down' theory of wealth.
That's true enough (albeit slow). What's more to the point is the
investment-down effect that occurs when consumer goods are re-mass-produced
in ever-widening swathes downwards and the consequent status-up effect as
the public buys them and shows them off according to their aspirations.
Money doesn't necessarily buy goods. It is goods that supply the motivation
for people to earn and spend money. Jean-Baptiste Say (1767-1832) put the
causation in the right order. Subsequently, many economists have lost sight
of this primary fact of economic life and see things the wrong way round.
One day student economists will be taught a little paleoanthropology at
university and discover that the envy-first phenomenon has occurred ever
since one hunter-gatherer chieftain (in South Africa among other places)
fancied the red ochre body paint of a rival chieftain at least 75,000 years
ago and traded currency of some sort (perhaps his daughter) for some
tablets of it so he, too, could enhance his own status within his group.
Bernard Bernanke, the Chairman of the American central bank, the Fed, and
highly knowledgeable about the early theories of Keynes (though
subsequently retracted by him), has evidently ignored Say (never mind
paleoanthropologists!). Bernanke thinks that by throwing money at the
American public they are going to buy. But, unfortunately for him and
Obama, there are no new goods. There's a plethora of goods invented up
until about 1980 and now produced cheaply by China (and, increasingly, by
Brazil and other countries) that will serve very well as replacements or
embellishments by those who are still in jobs and still have discretionary
income, but there are no great chains of brand-new ones that motivated all
classes of Western economies through the period of about 1780-1980.
So, if status-striving by means of consumer goods (called "social mobility"
these days by the mealy-mouthed) has come to an end in America and Western
Europe, what then? The majority will call it 'Depression' (with
disapproval) and a minority will call it a 'No-Growth Economy' (with
approval). Whichever the term doesn't matter. We are in for a long period
of adjustment while China, India, Brazil and many more countries catch up.
But this doesn't necessarily mean that status-striving will come to an end.
In fact, status-striving can never come to an end because it's an
instinctive feature of all social mammals, of which we are a highly
sophisticated example. In some Western countries status-striving will take
the form of riots and even revolutions -- which some countries such as
Greece and France are already experimenting with. In others -- probably
countries with smaller populations and more uniform cultures such as Sweden
-- populations will adapt more peacefully.
It won't mean the end of "progress" (whatever that means) nor innovation.
It just means that, for the time being, the Western countries are going to
have to tread water in the personal prosperity department while the rest of
the world catch up. There is no possible way that we can stop them. They
know how to do it, and we can no longer afford to invade them and keep them
subservient as we were wont to do in the last couple of centuries. If they
can't depend on our wobbly dollars and euros then they'll invent their own
trading currency. If we even so much as whispered the possibility of
hauling them back into line, several of the hitherto deprived countries
could cripple us overnight by means of an electronic attack on our
financial and physical infrastructures.
We have every reason to be positive during the forthcoming period of
Western adjustment. The era of science is now diffusing into every aspect
of modern life and its findings are replacing the simplicities of
militarism, organized religions, professional politicians, empire-building
senior civil servants and even money-printing bankers (our main bugbear at
present). To mention just a few of many specializations, Neurophysiology is
showing us how to more successfully potentiate the full brain-kit of
children, Ecology is teaching us to more fully appreciate the wonders of
the natural world, Genetics is telling us how to breed-out many diseases,
Evolutionary Biology is showing us many social models in which
status-striving can be safely practised and from which we can choose, and
the latest science, Epigenetics, is showing us that culture is to do with
the heritable tweaking of our genes and that the effects are permanent
enough to give us real hope that the present financial disaster need not be
the end of the story for the West.
Keith
Keith Hudson, Saltford, England
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