Monday, May 17, 2021

Back To The Future

Everything is different, but the same... things are more moderner than before... bigger, and yet smaller... it's computers...
        Bill and Ted's Excellent Adventure

"They keep on inventing new things nowadays, don't they, and making things lovelier and lovelier?" 
     H.G Wells "Things to Come". 


The times in which we live differ from all other times in two important ways. 

1: In the olden days things like machines and social institutions used to stay pretty much the same from generation to generation. But we use different phones from the ones our parents did, and our attitudes to sex and crime and religion are different from those of our grandparents. 

2: In the olden days, everyone was pretty much content with the way things were. But nowadays, people would like there to be more money, and they would like the money to be shared out more evenly. They think this would be a good thing. 

Some people would like the world to carry on getting better and better. But they are divided into three groups. 

Group A think that in order for the world to get better, we would have to make very big alterations to the way we do things. Unfortunately their ideas wouldn't work in practice. And the alterations they want are so big that people are scared of them. 

Group B also want the world to get better and better. And they have some ideas which might really work. But because they don't think that we need to make big alterations to the way we do things, they come across as very dull and no-one pays much attention to what they have to say. 

Group C have only come into existence recently. They also think that you have to make very big alterations to the way we do things in order to make the world better; but they think that those alterations are mostly to do with preventing the people who have most of the money from exploiting the people who do most of the work. People also used to think this a long time ago, which proves they are wrong. 

Some of the people who want the world to be better agree with group C. This unfortunately means that group B -- the ones who think that we should make the world better but not change too much -- have to pretend they agree with group C only not quite so much. (When Group C want to do something very silly indeed, the people from Group B do sometimes manage to stop them.) 

But all this does in the end is make the people who just want a little bit of change -- who are the overwhelming majority -- think that no-one cares about or agrees with them. So they join one of the groups who want to make the world worse.

This is why Labour lost the Hartlepool by-election. 


C.S Lewis said that all clergymen should have to do a translation exercise as part of their ordination exam: if you can't put an erudite passage of theology into ordinary language then you either don't believe it or else you don't understand it. This is why his religious books can come across as a little patronising and old-fashioned to modern ears. He plays the idea for not-particularly-subtle laughs at the end of his first science fiction book: the H.G Wells figure says things like: 

"But while I live I will not, with such a key in my hand, consent to close the gates of the future on my race. What lies in that future, beyond our present ken, passes imagination to conceive: it is enough for me that there is a Beyond." 

which the Christian philologist hero has to translate into the tongues of angels as: 

"He says that though he doesn't know what will happen to the creatures sprung from us, he wants it to happen very much." 

In this spirit, I attempted to translate a key passage from Tony Blair's New Statesmen essay into English. The original runs: 

"The progressive problem is that, in an era where people want change in a changing world, and a fairer, better and more prosperous future, the radical progressives aren’t sensible and the sensible aren’t radical. The choice is therefore between those who fail to inspire hope and those who inspire as much fear as hope. So, the running is made by the new radical left, with the “moderates” dragged along behind, uncomfortably mouthing a watered-down version of the left’s policies while occasionally trying to dig in their heels to stop further sliding towards the alienation of the centre." 

I made an honest attempt to attach meanings to words like "progressive" "moderate" and "radical left" and to work out what "an era when people want change in a changing world" could possibly mean. But I don't think that Blair himself could really say what they mean. I don't think that the essay goes into normal language. He doesn't understand it or believe it.

*

In Blair's world, the goodies are now called Progressives. "Progressive" encompasses both the The Centre and The Centre Left. The British Labour Party, the Lib Dems, and the American Democrats are all Progressives. The Right are still the enemy, of course, but The Left, the New Left, The Marxist Left and the Woke Left are also baddies because they will prevent the Progressive Centre getting back into power. 

Progressive is a weasel word. It might just be a synonym for Liberal. I might say that it is Progressive to think that gay people should be allowed to get married, and Conservative to think that they shouldn't. It might be used rather more widely: Progressives think that we can make the world better, as opposed to Conservatives, who think that it is just fine the way it is and Reactionaries who think it was better in the olden days. But the word is also bound up with the idea of Progress in technology and science; the idea that discovery and invention are constantly making the world lovelier and lovelier. We might use Progress to describe a genuine change for the better: but we might also use it to describe something which is regrettable, but inevitable. People used to die of diabetes; now it is eminently treatable. That's Progress. It's sad that we are going to cut down the forest to build a motorway: but the motorway represents Progress. You can't stop Progress. 

In power, Blair used "modernise" to mean "whatever is in my head right now". Schools and laws and hospitals were never merely changed or improved: they were always Modernised. (This meant that he didn't have to explain why his changes made things better: change was a good thing in itself.) The danger is that Progress in the scientific sense (we are making more and better machines) becomes merged with Progress in the political sense (we want to make everyone richer and happier) and then used rhetorically to justify any political change that you happen to feel like making. You may not like the idea of voter ID, but you can't stop Progress. If you aren't terribly careful you will find yourself saying that the Millennium Dome and the Iraq War must be good ideas because computers are so much faster and cheaper than they were twenty years ago. 

Progressives and The Left are now in opposition. Progressives believe that the world can be made lovelier and lovelier by science and technology; in contrast to Socialists, which thinks that the world can be made better through change to economics and the power structure. I, a Socialist, think that if the factory workers want a living wage, they should demand one, down tools, and refuse to work until the Boss agrees to give them a pay rise. You, a Progressive, think that if we build newer and better steam engines and warp drives, the factory will be making so many widgets that the management will be able to afford to double and triple everyone's pay (and will do so, out of the simple goodness of their hearts.) But he, a Conservative, thinks that if the workers want a living wage they should damn well work harder and buy a factory of their own. 

As an analysis, this is not intrinsically ridiculous. I know what a Progressive is, and I know that I am not one. You probably know whether or not you are a Socialist. The drawback is that for the first 90 years of its existence, Labour was definitely a Socialist Party. It had a little definition of Socialism on its membership cards. Before there can be a Labour Prime Minister, we have to admit that the party was predicated on a catastrophic error. 

"Wrong about everything for a hundred years -- vote for us anyway!" is not a great message. 


Blair thinks that technology might make the world a better place because it could increase freedom and opportunity. On the other hand, it might make the world a worse place by reducing those things. It's the role of the Progressives to make sure that the former happens and the latter does not. 

Freedom and Opportunity are two more dangerously vague and abstract words. So is Progress. Freedom to do what? The Opportunity to do what? Progressing towards what?

Twenty years ago a homosexual was not Free to get married in this country. Fifty years ago he was not free to have consensual sex. I don't think that science or technology caused his situation to change. I think that radicals -- the Loony Left  -- campaigned and argued and eventually won the argument because they were in the right. In this country, Muslim women are free to cover their faces if they want to. Some people think they shouldn't be. In France they do not have that freedom. In Saudi Arabia they are not free to leave their faces uncovered. We can have an argument about whether your right to dress as you like trumps my right not to be freaked out by people in weird clothes. But I can't see how any scientific advance affects the argument one way or the other. 

I can see in principle how a technological change could have a political and ethical implication. The contraceptive pill changed the way we behaved, and the way most people thought we ought to behave. You could plausibly argue that up to the 1950s it was immoral for a man to have sex with a woman he didn't intend to marry, because she would end up with a baby and he would end up on the next boat out of town; but nowadays there is no objection to it other than the purely prudish or religious one. If you said "Andrew, your belief that pre-marital sex is sinful is obsolete, redundant, a relic of a bygone era and a museum piece" I would understand what you were saying.

In so far as they mean anything at all Freedom and Opportunity tend to be buzzwords of the political right, not the political left. Conservatives tend to believe in Equality of Opportunity (everyone should have an equal shot at getting rich). Socialists tend to believe in Equality of Condition (everyone should have a good time even if they are poor). They don't think that everyone should have the same amount of money as everyone else (whatever the American internet may tell you) but they do think that the rich should be a bit poorer and the poor should be a bit richer. The Conservative says that the it is OK for the boss to have Rolls Royce provided the man sweeping the floor had a fair chance of owning his own factory one day. The Socialist says that we should take some of the money that the boss spends on smart cars and use them to set up a really good public transport system. The Progressive says -- what? That computers and the genome project will mean that it soon won't matter whether you have a car or not? That new technology will make Rolls Royces so cheap that everyone will be able to afford one? The pretty soon we'll have jetpacks so the question won't arise? A Socialist approach to technology would be one that asks how we could use it to make everyone more Equal -- in particular, how to make sure that everyone has equal access to the internet, say by giving everyone free wi-fi. But the word equality is not in Blair's political vocabulary. 

Compromise and moderation are good things. But Centrism always seems to mean "the left should become more like the right" and never "the right should become more like the left". I finds some of Blair's language quite alarming. Blair takes it for granted that Conservatives are proud of their country (and that this is a good thing) but that the Left are inclined to be ashamed of the whole idea of nations. And he speaks with apparent approval of The Right's championing of "flag, family and fireside". 

Freedom and opportunity. Flag, family and fireside. Traditional Values. Family Values. Back to Basics. We all know what this is right-wing code for. 


I am not completely sure if the technological changes that have happened in our lifetime really are the most significant since the invention of the steam train. I think that the two biggest shifts were the invention of the printing press in the fifteenth century and the invention of television at the beginning of the twentieth. The Internet is the latest iteration of a mass media that has been evolving since 1922. I am not sure that Blair's talk of "a technology revolution of the internet, AI, quantum computing, extraordinary advances in genomics, bioscience, clean energy, nutrition, gaming, financial payments, satellite imagery " is a great deal more sensible than Boris Johnson's talk of pink eyed terminators and terrifying limbless chickens, and it's a lot less funny. And I remain to be convinced that computer games and satellite imagery have rendered Socialism obsolete in the way that the oral contraceptive pill (arguably) rendered Chastity redundant. 

Blair uses the idea of free university tuition (with scare quotes around the word free) as an example of something which used to be right but is now wrong. "Politically it is a museum piece, a lingering relic of an outdated ideology" he rambles. The argument seems to be that the idea of free education sprung from Marxism; Marxism is now out of date, so free education is out of date, so people should pay to go to college. 

But in what way is Marxism "out dated"? I don't want to hear Conservative arguments about why it is wrong. If it is wrong it was always wrong. I want to hear why the information technology has made it redundant. Does he mean anything more than "In the 60s, Marxism was fairly popular; now, not so much?" Or is there some sense in which Marxism was a good way of doing things in 1968 but a bad way in 2020? But in what way had Xbox III, Google Maps and Limbless Chickens rendered "from each according to his ability..." obsolete? 

If we believe in freedom and opportunity, then it follows that everyone who wants to go to university should be able to go to university: poverty and class should not be a barrier. 

There are other questions we might want to ask. Is education a good thing in itself, or are colleges merely one way to produce people who can fix computers and build bridges and perform heart surgery? Are universities centers of liberal wisdom or hotbeds of godless left wing book-learning? Are you better off getting a job at Apple and working your way up than taking you time getting a BSc in computer science? But granted that university is a good thing and that freedom and opportunity are also good things, then everyone who is clever enough to do the course ought to be able to study for a degree. 

The question is how we pay for it. Private fees and scholarships? State funded courses and maintenance grants? Student loans? Some other system which hasn't occurred to me yet? The answer depends on practical questions (what can we afford?) and moral questions (what is fair and just?) and social questions (what is good for the rest of the country?) If you think that education is a good thing in itself and that a country in which people have studied Proust and Quantum Physics and the life cycle of the mollusc lemur is a good country to live in, then you will be prepared to use tax money to finance higher education. If you see college in basically instrumental terms -- spend a few years studying to get a piece of paper which can be traded in for a better a job when you turn twenty five -- then you will think that students or their families should pay for it themselves. If you think that students are basically idle layabouts who drink too much then you'll be happy for college to be the province of kids with rich parents. The argument is very much the same as it always was. I don't see how gene sequencing or robot chickens effects it one way or the other. 

Yes computers are wonderful and science is wonderful. I had my Covid jab last week and the little wobbly line on the chart in the Guardian is going down every week. I take a little pink pill every day and my left leg happily remains the same size as my right leg. I can read obscure golden age Human Torch stories while sitting on the loo. If I want to. The internet has made online learning technically feasible: the Pandemic has normalized it to some extent. Of course that is something that the Minister for Education ought to be thinking about. "Now we have the possibility of Zoom classrooms, we ought to be looking at how to use them, and how to train teachers to use them" is a perfectly sensible thing to say. It is the idea that there is a distinctly Progressive way of doing remote learning -- and that this is different from the Old Left way of doing it, or the Conservative way of doing it -- that I struggle with. 

The Left used to talk about how the Eleven Plus and Streaming and the existence of private schools tended to mean that the children of middle-class parents were defined as "successful" by their school teachers, where the children of working class parents were judged to be "failures"; and that this made a nonsense of the whole idea of meritocracy. The Left are worried that black children might go right through school without reading a single book by a black author or encountering a single book about a black character. These discussions don't go away, or become less important, because we can now see our teachers on our IPads. Simply shouting "This is the future!" does not get us very far. 


Colstonians believe that flogging people and throwing them overboard would be wicked to day, but was really not wicked in the seventeenth century. Those of us who think that slavery was always out of order are condemned as Woke. That is what the word Woke means, I understand: the belief that you can judge the past by the standards of the present. Blair mentions Woke and Political Correctness in passing in the essay: the far-right press obediently responded to the dog whistle by running headlines about how the former Prime Minister had savaged wokery although that wasn't what the article was about. But maybe Blair really does have a Colstonian belief that morals and ethics mutate and change. Securing for the workers by hand or by brain the full fruits of their industry really was The Good in 1901, but has really become a bad idea in 2021. He claims at one point that Clause IV -- the Labour Party's formal statement of its socialist principles -- was only ever a mechanism and that the mechanism is now obsolete but the underlying values have not changed. I can see how this could be true: the decent man in the 1950s abstained from pre-marital sex; but the decent man in the 1970s made sure he always had a packet of little rubber thingies in his wallet. His abiding value was that you don't make a woman pregnant if you can't or won't support the child; or more generally that you can't harm someone else for your own pleasure. Chastity and contraception were both mechanisms that enacted the same value. Not everyone would accept this: Christian might say "the risk of pregnancy is incidental: chastity is a Good Thing In Itself. A Socialist would certainly say "sharing the profits among the workers is not a means to an end: it is and end in itself, it is what we mean by the Good." It would help if Blair would say what the abiding values of Labour are; what values that he has in common with Tony Benn and Arthur Scargill (despite having a difference of opinion about the mechanics.)  But of course, he can't. 


I started out by trying to come up with concrete definitions of Blair's buzzwords. 

Progressive - Believing that the world ought to carry on getting lovelier and lovelier 

Radical - Believing that the world will only become lovelier if we make big changes 

Left - Believing that we need to make big changes to the economy and the power structure 

Centrist - Believing that the world can be made lovelier with only small changes 

Freedom - When everyone can do whatever they want to provided it doesn't harm anyone else 

Opportunity - When everyone has an equal chance to earn money and become rich. 

But the point of these words is that they cannot be tied down. The same goes for Woke and Political Correctness, of course. Blair specially says that he can't define them, but "ordinary people know exactly what they mean". I don't think ordinary people do know "exactly" what they mean; because I don't think they have an exact meaning. 

A better translation of Blair's word salad would have run as follows: 

"The problem with good people is that at a time when good people want things to be better; good people aren't sensible and sensible people aren't good. The choice is therefore between those who don't seem very good, and those who do seem good but who are also a bit scary. So the bad people do well, and the good people have to pretend to be a bit bad; while trying to stop the bad from being too bad in case the good all stop supporting them." 

Kier Starmer lost the election because he was not good. He will win the next election if he is better. I think that is a theory we can all get on board with.



The future is something which everyone reaches at the rate of sixty minutes an hour, whatever he does, whoever he is.

The Screwtape Letters 



98 comments:

Andrew Ducker said...

"Woke" means "Aware of the power structures which bind us" - coined by black Americans, originally mostly specific to racism, and akin to that bit of The Matrix where Neo discovers what's really going on.

"Blair thinks that technology might make the world a better place because it could increase freedom and opportunity. On the other hand, it might make the world a worse place by reducing those things. It's the role of the Progressives to make sure that the former happens and the latter does not." - that, I think, is a pretty good description of what he means by "an era when people want change in a changing world". People want *social* change in a *technologically* changing world.

Oh, and the internet is making a huge difference, by removing the gatekeepers. Without the internet Black Lives Matter would have been a nice movement that got no mainstream TV coverage, and vanished. #MeToo would have, well, not existed. American teenagers are seeing reports of healthcare and social systems in other countries and realising that it doesn't have to be that way.
Also, Trump used Twitter to become President. It's not all positive when you let people talk directly to each other ;-)

Aonghus Fallon said...

I think the internet has changed the job market in a fundamental way - the internet and mechanisation - and that these changes are only going to get more and more pronounced. Mechanisation means that most factory jobs are doomed. The internet means that most desk jobs can be sourced elsewhere - e.g. auditing, graphic design, software development - wherever’s cheapest, basically. In the UK, I think this was compounded by (a) the speed with which the conservative party handled the vaccine roll-out & (b) a lack of clarity re what Labour actually stood for.

My dad always used to say - ‘The triumph of the British Right is usually due to the failure of the British Left’ (ie, not due to any intrinsic merit on the part of the Conservatives).

Andrew Stevens said...

First of all, this is a quite excellent essay. Just to get that out of the way first and foremost.

You, a Progressive, think that if we build newer and better steam engines and warp drives, the factory will be making so many widgets that the management will be able to afford to double and triple everyone's pay (and will do so, out of the simple goodness of their hearts.)

What happens is that technology reduces the number of people needed to make a widget, thereby increasing productivity and making each worker more valuable. When this happens across the economy, competition for labor ensures that workers get paid more (including those workers who have not become more productive - see the Baumol Effect, which is likely the main driver of the "cost disease" in education and health care). No "goodness of their hearts" necessary. This may or may not create structural unemployment, depending on how quickly the economy adapts to the surplus labor by creating new jobs for these people to continue creating things people want. (Which may, for example, include writing blogs and getting paid for it on Patreon or creating bespoke crafts for people on Etsy.) Undoubtedly, some people get left behind. The 50-something worker who has been doing a job all his life and now finds himself laid off with no real time left to gain new skills. The horseless carriage put buggy manufacturers almost completely out of business. This is, I agree, very sad. Most people, right or left, agree that this worker should be prevented from falling into abject poverty as a result.

Of course, lots of people will probably argue with me that my argument above about productivity is not true and that workers just continually get more squeezed and more exploited just as Marx predicted they would. I am not quite sure what history it is these people are looking at. Certainly, I imagine that Marx himself, were he alive today, would almost certainly agree that he was wrong and even agree that Alfred Marshall provided the theoretical infrastructure which destroyed Marx's argument. (Before that, lots of economists thought Marx was wrong, but couldn't give a satisfactory answer to why he was wrong. His conclusions do pretty much follow from the Labor Theory of Value, which was the dominant theory of the day.)

One mistake is to imagine that the goal of an economy is to create jobs. "It’s said that Milton Friedman was once visiting China when he was shocked to see that, instead of modern tractors and earth movers, thousands of workers were toiling away building a canal with shovels. He asked his host, a government bureaucrat, why more machines weren’t being used. The bureaucrat replied, 'You don’t understand. This is a jobs program.' To which Friedman responded, 'Oh, I thought you were trying to build a canal. If it’s jobs you want, you should give these workers spoons, not shovels.'"

I assume Tony Blair just doesn't want to admit that Socialism was always wrong, for the political reasons you gave in this essay. ("Wrong about everything for a hundred years - vote for us anyway!" Though I must say that the Democratic Party, the party of slavery, secession, and segregation for nearly 200 years, more or less does say this and does in fact get a lot of people to vote for them anyway.)

Andrew Stevens said...

"Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." - John Maynard Keynes

Aonghus Fallon said...

Defining the primary function of a job reminds me of a story I was once told about Ford who had union problems, mechanised his plant and sacked most of his workers, then made a point of showing the union rep around the factory and explaining how this machine did the work of ten men and that machine did the work of twenty.
‘That’s all very well, Mr Ford,’ the union rep (allegedly) replied. ‘But one thing they won’t do is buy cars.'

g said...

Andrew S: It does seem as if competition for labour ought to result in pay tracking productivity. But so far as I can tell, the conventional (and evidence-based) wisdom at present is that pay used to track productivity but that somewhere around 1980 it stopped doing so: see e.g. the graph here. Either that graph is terribly wrong, or the idea that we just need maximally-free markets and then workers will get better off as technology increases their productivity is just as badly refuted by actual history as anything in Marx.

Andrew S: The Democratic Party says (implicitly) something more like "Wrong about everything for a hundred years, followed by a big change of opinions and being right about everything for fifty years -- vote for us!" which is maybe not so obviously crazy.

Andrew R: I liked this article a lot but I don't think Blair's comments are quite as meaningless as you say. I propose the following alternative translation. I have ignored some bits that fairly clearly are more or less meaningless but that don't seem to be load-bearing in Blair's argument, such as it is.

"In the future, we want people to be better off, and we want how well off they are to depend less on things that no one regards as good reasons for one person to be better off than another. [The progressive problem ... future] Some people think that to achieve this we should make large rapid changes. This isn't sensible -- if we try to change things too quickly the results are likely to be bad -- but the sensible alternative, of changing things slowly, is unexciting [the radical ... as much fear as hope]. So the people who get their followers excited and attract attention are the people who want to make large changes quickly; the large quick changes they want aren't quite the same as those wanted by similar people in the past [So, the running ... new radical left]. Those who want people to be better off and less gratuitously unequal, but who don't want to change things dangerously quickly, find that they have to say some of the same things the large-quick-change people say, but of course they don't go so far [with the moderates ... watered-down version of the left's policies]. And, because they worry that while these policies do excite some people, they horrify others whose votes they might also need, they sometimes object to some of those policies [while occasionally ... alienation of the centre]."

There's nothing terribly interesting here, but it doesn't seem to me either meaningless or obviously entirely wrong. More uncompromising views are better at attracting enthusiastic support but also at risk of driving off other people whose votes you might want, and maybe this is an important difficulty facing the Labour Party. (You can see a similar dynamic on the right; e.g., in the US the Republican Party has largely become the Party Of Trump, who has some extremely enthusiastic supporters but also puts a lot of people off.)

Aonghus Fallon said...

I guess the modern fallacy is to assume people are there to serve the economy, when in fact it’s the other way round? The primary function of an economy is to ensure a proper standard of living for the greatest number of people.

Richard Worth said...

'It would help if Blair would say what the abiding values of Labour are; what values that he has in common with Tony Benn and Arthur Scargill (despite having a difference of opinion about the mechanics.) But of course, he can't.'

Would it be fair to ask what values Blair (or indeed Benn and Scargill) have in common with Harold Wilson, Clement Attlee, Ramsey MacDonald or or Kier Hardy? I suspect that Blair and Wilson would have a lot in common about popular music and the White Heat of Technology, but also with the challenge that once you have a Welfare State and a National Health Service and nationalised industries, how do you generate enough prosperity to fund them. Arguably, they also both made practical progress on gay rights and other social issues, in other words progressive without being too radical. Wilson would probably have warned Blair to stay out of Iraq, but every Prime Minister has their share of brush-fire wars. By contrast, I am not sure how far Scargill or Benn were central to the Labour Party, rather than to their own brand of socialism.

Pete Ashton said...

Enjoyed that. 👍

Richard Worth said...

Curiously, both Benn and Scargill were Eurosceptics, in part because EU competition rules prevented the kind of state management of industry which they both supported. This does not mean they would ever share a platform with Boris Johnson or Nigel Farrage, but it does raise challenging questions about what being left-wing in the 21st century actually looks like.

Andrew Stevens said...

Either that graph is terribly wrong, or the idea that we just need maximally-free markets and then workers will get better off as technology increases their productivity is just as badly refuted by actual history as anything in Marx.

The graph is quite (though not terribly) wrong for a number of reasons. See this link which deals specifically with that exact graph.

But of course we don't need that, do we? We can just take that graph as absolute gospel and what does it show? It still shows that workers are getting better off as technology increases their productivity. I don't know where that graph would even give you the idea that the view is "badly refuted."

Andrew Stevens said...

The primary function of an economy is to ensure a proper standard of living for the greatest number of people.

That's right. This is what capitalism has excelled at after thousands and thousands of years of human failure at it. All the things we modern people blame capitalism for - poverty, child labor, slavery (! - yes I have heard that), inequality, etc. - are all things which have been around since the dawn of man. For most of those things, capitalism is the only thing we have ever known which has actually reduced them. (Though admittedly the jury's still out on inequality. Capitalism was hugely successful at reducing that at first, but I acknowledge it's been going backwards in recent decades on that specific measure. I personally don't really care very much about inequality as long as the poor get rich, but I appear to be in a very small minority on that.

Andrew Stevens said...

For the record, if you graph the difference in income distribution between 1950 and today in the U.S. in real money terms, what you'll see is that the graph has flattened and moved to the right. The poor are better off, the lower middle class are better off, the very wealthy are still very wealthy. The major difference is that the upper middle class (roughly people with college degrees) have gotten quite rich. This has increased inequality, but without making anyone else worse off, except relatively speaking. How much you care about that is indeed a values question.

Andrew Stevens said...

(Note: other countries are also not getting poorer. It is simply not true that the U.S. is profiting off the backs of poor countries. In fact, the increase in living standards over the last 20-30 years in China and India is quite stunning.)

Andrew Stevens said...

The best argument against capitalism I have ever heard is still the environmental one. However, we should at least give the devil its due. Capitalism is causing a serious environmental crisis because it has been so successful. Raising people's living standards globally requires a very great deal of energy. The easiest economic solution to how to obtain that energy is (still) fossil fuels unfortunately, which requires a huge amount of burning. Too much wealth spread too equally over too many people (the last the result of huge advances in medicine, food production, etc.). Result: lots and lots of burning of fossil fuels.

Andrew Stevens said...

To put it another way, with the exception of the size of my house and the fact that I don't have servants, my standard of living is in fact quite a bit higher than John D. Rockefeller's, possibly the richest man who ever lived.

g said...

Andrew S: sure, the graph shows median income continuing to increase _a bit_ as productivity increases, but it only goes up 9% where productivity goes up by more than 2x. This is, to put it mildly, not what we should expect if there is an efficient market for workers' labour, and it isn't the sort of increase that would give the lie to Andrew R's mockery when he wrote "You, a Progressive, think that ... the factory will be making so many widgets that the management will be able to afford to double and triple everyone's pay" The story told by that graph is that the factory is making more than twice as many widgets and management is very much not doubling everyone's pay.

All this, of course, is moot if the graph is all wrong. The article you link to argues as follows: "productivity" is there defined as net domestic product per hour worked; net domestic product is just the sum of everyone's income (defined broadly); so "productivity" is a measure of income, not really of output in any sense other than "what people will pay for"; so the graph is super-misleading because the line labelled "productivity" should be labelled something else.

But to whatever extent that's right (and I am prepared to stipulate that it's perfectly right, and fully expect that that's not far from the truth), it seems to me that the actual message of that graph is actually just as much evidence that the nice positive story you tell, where competition for labour ensures that as the factory starts making twice as many widgets the workers get paid twice as much because otherwise they would go and work somewhere that pays better, is far from the truth. Maybe the continuing rise of the upper line on that graph doesn't really reflect productivity maybe it's something else that is enabling the total amount of income (again, defined broadly; as I understand it this includes things like growth in the value of company stock) to go on increasing. But whatever it is, that increase is almost all going not to the ordinary workers represented by that lower line labelled "hourly compensation" (which is apparently the "average hourly compensation of production/nonsupervisory workers in the private sector"), but to ... someone else. If you think the "someone else" is, say, the people with no jobs at all, I have a bridge to sell you; no, the people-who-aren't-production/nonsupervisory-workers that money is going to are the company executives, the business owners, and other people with lives that were already much nicer than those of the workers in the factory.

If anything is really different, compared to the situation where that upper line really does measure "productivity", I'm not sure what.

As it happens I mostly agree with you in not caring very much about inequality as long as the poor get rich; but, as That Graph hints, in the US the poor have not been doing much of that since about 1980. Another thing that the graph seems to suggest, by the way, is that this isn't just the price we pay for growing the total size of the pie: after ~1980 when ordinary workers almost completely stopped getting better off, there's no increase in the slope of the possibly-mislabelled "productivity" curve, which represents how well off everyone is in aggregate where you count an extra $10 for Bill Gates the same as an extra $10 for the guy who shines his shoes.

And I do (and I think you too should) care somewhat about inequality even if the poor are getting slightly better off, because wealth brings benefits other than being able to buy stuff: living in nicer places, political clout, and the like. And if the poor are getting slightly better off in absolute (inflation-adjusted) terms while getting much worse off relatively, what that means is that the not-so-material advantages of rich over poor are getting bigger.

Timothy Collins said...

Not to say it is what Blair thinks, or wants people to think, when he says "Centrist" — but a kinder definition of the Centrist mindset in the context of your other "plain language" definitions might be: "believing that although things can be done to make the world lovier, getting it wrong is very easy and very dangerous, so we should only effect change slowly and carefully and with built-in escape hatches, so as to minimise the risks".

That is the kind of Centrism that this pessimist feels for; it does not deny that perhaps some of the Radicals' policies would lead to great improvements; it merely says of any "yes, but although I can't necessarily see the specific way it might go wrong, there is a 15% chance that this would lead to catastrophe; I'd rather stick with the current imperfect status-quo than take the gamble".

g said...

I keep saying "about 1980" but actually it seems to be more like 1975. Sorry about that.

Andrew Stevens said...

The story told by that graph is that the factory is making more than twice as many widgets and management is very much not doubling everyone's pay.

One thing that I should say is that if you think economists are immune to producing "panic porn," they certainly aren't. They have the same incentives to create it as anyone else.

The gains in productivity are being captured (mostly by workers). It's just that they're being captured primarily by the upper middle class. Plus there are all the usual problems with looking at salaries in that time period. Since 1975, U.S. workers have increasingly taken their gains in benefits rather than salary, so looking at salary rather than total compensation is very misleading, fewer and fewer people work in the jobs that are being measured, etc. And even then it has to concede that workers have gotten better off in real terms. (The EPI just fudges now and claims they are "not as much better off as we would like." Well, okay, but I am constantly being informed that workers are worse off. And that is simply false. And, quite frankly, obviously false.)

where competition for labour ensures that as the factory starts making twice as many widgets the workers get paid twice as much because otherwise they would go and work somewhere that pays better, is far from the truth

That is not, in fact, what I said. I never said there was a one-to-one correspondence between number of widgets made and pay to the workers (that if one doubled, the other would double). That would be astonishing, if true, since gains in productivity also equate to lower prices and, yes, higher corporate profits (which, as an investor, I certainly see a share of myself). What I said was, "What happens is that technology reduces the number of people needed to make a widget, thereby increasing productivity and making each worker more valuable. When this happens across the economy, competition for labor ensures that workers get paid more (including those workers who have not become more productive - see the Baumol Effect, which is likely the main driver of the "cost disease" in education and health care)." I totally stand by this. This is, in fact, what we have seen for the last 100 years at least.

Note also that, unlike Marx, I am making no predictions. I have no idea what's going to happen economically in the next decade or two. Economics is dependent on human behavior. I would even go so far as to say that there are no Iron Laws of Economics. There are some which are pretty damn certain and others which are not. The Phillips Curve was a pretty good theory by the Keynesians right up until the point where it was completely and utterly falsified by stagflation. Explaining and understanding the past and present is what economics can do. We can assume (and probably should assume) that the future will be like the past, but there aren't any guarantees.

Andrew Stevens said...

The people-who-aren't-production/nonsupervisory-workers that money is going to are the company executives, the business owners, and other people with lives that were already much nicer than those of the workers in the factory

It actually includes the workers at the factory (usually in the form of a 401k). I am not a company executive or a business owner. I am a highly compensated prole (though admittedly, I haven't actually worked in a factory for 25 years). In each of the last five years, with the exception of 2018, more than half of my income has come from investments rather than my job.

Andrew Stevens said...

You can read, I am sure, tons of stories about the decline of America's middle class and how the middle class is being squeezed out of existence. In some sense, this is true. There isn't a nice bell-shaped curve of income distribution anymore like there was in post-World War 2 U.S. But if you actually analyze the data, you can't help but discover what I have been saying all along. What has actually happened in the last 50 years in the U.S. is that the upper middle class has gotten rich.

Andrew Stevens said...

(Ah, found a number. 30% of American households are what are called "the mass affluent.")

Andrew Stevens said...

For the record, I am actually too wealthy to be included in that definition and I live in a modest home with a next door neighbor who works for the fire department and a neighbor across the street who is a soldier (both black). There is an additional 6% of U.S. households above the mass affluent.

Richard Worth said...

Final thought (honest). Is there a line between 'moral' and 'administrative' issues? I understand that the death penalty is not about managing prison numbers down, and nuclear weapons are not simply a more convenient way of carrying out carpet bombing: there are moral issues around taking life. However, if we agree that all kids should get free education, or all sick people should get free healthcare, then how to organise this may be a matter of good or bad administration. In this case, Blairite policy on higher education funding and student loans may not be simply a matter of keeping the rich man in his college and the poor man at his porter's lodge. Rather, it was about trying to allow more young people to go to college, without putting an excessive burden on public spending. Within that, I don't think there was a particular bias against the arts: arguably arts students were less likely to land a good job and pay back their loan. Whether this is good or bad administration is another matter, but it may not carry the moral weight that you suggest.

g said...

Andrew S:

It is of no relevance to the point under discussion if "the gains are being captured by the upper middle class". Those are not the people whose income has been conspicuously failing to grow, they have no overlap to speak of with factory workers, and they are not the people the Labour Party is supposed to represent here in the UK. (Which, you may recall, is the actual context for all of this.)

Yes, workers get both actual pay and other forms of compensation. That is why (I quote from the EPI's webpage whence cometh that graph) "Data are for compensation (wages and benefits) of production/nonsupervisory workers". (Emphasis mine.)

I'm sorry that you are constantly being told that workers are worse off than they used to be, but I'm not sure why that means you should pretend that Andrew R claimed that, when so far as I can see he simply didn't.

If the only claim you are "totally stand[ing] by" is that when productivity goes up (no matter how much) workers are paid more (no matter how little more), then that's fair enough but it's also clearly totally unresponsive to the thing Andrew R said that you quoted and were apparently responding to. Here it is again: "You, a Progressive, think that if we build newer and better steam engines and warp drives, the factory will be making so many widgets that the management will be able to afford to double and triple everyone's pay (and will do so, out of the simple goodness of their hearts.)"

Before about 1975, "productivity" (or whatever exactly it is that the line labelled "productivity" on that graph; it seems to me it has quite a lot to do with actual productivity in the relevant sense, that of how much money businesses are able to bring in) went up at a certain rate, and workers' pay went up pretty much exactly in proportion with that.

Since about 1975, "productivity" has continued to go up, by a factor of about 2.4 in fact, and workers' pay has gone up (according to that graph) by only 9%. (The EPI page has a graph with more recent data; as of 2019 it seems to be about a factor of 2.6 for "productivity" and about 1.3 for workers' pay. But it's very uneven, and it'll be interesting to see the numbers for 2020.)

You may, if it pleases you to do so, say: So long as workers aren't literally getting poorer, everything's fine. But this is not in any sense a response to what Andrew wrote. The opinion he (mockingly) put into the mouth of the "Progressive" was that if productivity goes up dramatically, workers' pay will go up dramatically too. That has very clearly not been happening.

No, the "people who aren't production/nonsupervisory workers" does not include the workers at the factory. I mean, I'm sure it includes some people who are physically located in the factory building, but the term "factory workers" has a meaning, especially when it's being contrasted with terms like "bosses", and it isn't "everyone associated in any way with a factory, including the management". The people doing the actual factory work in the factory are not highly compensated proles like you and me, and they do not generally have investments whose growth exceeds their pay, and those are the people the Labour Party has traditionally claimed to represent, and those are the people that Andrew R thinks it ought to be fighting harder for.

g said...

Oops, a correction: I was misinterpreting the graph a bit. The figures in the graph are apparently _increases_ relative to 1948. They start to diverge, I think, after 1972; at that point they are (100%+)92% for "productivity" and (100%+)97% for "hourly compensation"; in 2019 they are respectively (100%+)258% and (100%+)129%. So between 1972 and 2019 "productivity" went up by about 86%, and "compensation" by about 16% -- compared with 1948-1972, when "productivity" went up by 92% and "compensation" by 97%.

So, the ratio for 1972-2019 is not as extreme as I thought it was: a factor of 5 or so. But it's still a very long way from the rosy picture Andrew R had the "Progressive" painting, and the 1948-1972 period seems to make it clear that this extreme ratio is not needed for economic growth.

Andrew Stevens said...

I have nothing particular to say about the UK. For all I know, total compensation really has stagnated there for rank-and-file workers for the last four decades. Who knows?

That's not true in the U.S. though if you consider total compensation. See this link. What happened in the 1970s in the U.S. was that rank-and-file workers began taking (or being given) the lion's share of their gains in benefits, mostly health insurance and retirement plans. In part, this was probably caused by a highly activist federal government in the late '60s and early '70s. (E.g. Nixon imposed wage and price controls on the economy in 1973. This led companies to offer larger benefit packages in order to attract workers, since they weren't allowed to offer higher pay.)

On the general point of capitalism, it is simply a matter of fact that average workers have received larger gains during periods of more unrestricted capitalism and smaller gains when capitalism is restricted. This is very consistent (though not perfectly so, of course) across all societies and historical time periods. (Moreover, I would go so far as to argue that we all know this is true. Most of us simply choose to ignore it so we can carp about the system we live under.)

g said...

Your link is interesting, but the reason it gives for disagreeing with (e.g.) the EPI's famous graph (though they don't mention that graph explicitly) doesn't make sense as an explanation for that disagreement, because the EPI's graph is already claiming to plot total compensation, not just wages.

So presumably one or the other has made some mistake (or maybe both have). I can't claim sufficient economic expertise to know which; can you?

My impression is that (1) average workers have received larger gains under capitalism than under other types of economic system but that (2) it is not in the least clear to me that "more unrestricted" capitalism does better for average workers. I'm not, to be clear, saying that that's definitely false; but e.g. that graph we've been arguing about seems to suggest not: I'm pretty sure the US had more-unrestricted capitalism, overall, in the 1973-2019 period than the 1948-1973 period -- though the obvious place to put a transition would be the start of the Reagan presidency, which doesn't match up with the apparent abrupt change in That Graph.

I had a quick look for studies on this. So far the nearest thing I've found is this analysis which looks at a measure of "economic freedom" (which isn't quite the same thing as unrestricted capitalism but is clearly in the same ballpark) and finds that it's strongly associated with higher GDP, but has no correlation with GDP growth. That doesn't quite tell us what we want to know because (1) it's only looking at the short term -- growth in one single year -- and maybe the benefits or harms of "economic freedom" show up only on longer timescales, and (2) GDP isn't the same thing as gains for "average workers". (It's closely related to average gains for workers, which is not at all the same thing.) I'd guess (but it's only a guess) that, at least among the relatively "free" countries, greater "economic freedom" tends to go along with more inequality, in which case if "economic freedom" is uncorrelated with GDP growth it probably correlates negatively with, say, median income growth.

On the other hand, this analysis also looks at "economic freedom" and GDP growth, and this one claims to find that the two are correlated -- but reading the actual paper and not just the abstract, it seems like they did like a dozen regressions of various kinds, and some found a positive relationship between "economic freedom" and GDP growth, some a negative relationship, and some nothing significant.

(My naive expectation would be that over the whole range of variation "economic freedom" would tend to go along with higher GDP growth, because very repressive regimes don't tend to do well economically, but that looking only at the upper end things would be less clear, because e.g. social-democratic countries seem to do pretty well economically.)

But, please, do tell me about how actually I know that more-unrestricted capitalism is better for the growth in prosperity of average workers and I'm lying about that so that I can complain about the system. I am intrigued by your ideas and would like to subscribe to your newsletter.

voxpoptart said...

Andrew Stevens is giving the standard talking points -- ones I heard over and over while earning an honors Economics degree -- about how "Capitalism is the only thing we have ever known which has actually reduced [poverty, slavery, inequality etc]". Yet he gives the game away, because he also admits, to his credit, that "Raising people's living standards globally requires a very great deal of energy. The easiest economic solution to how to obtain that energy is (still) fossil fuels unfortunately, which requires a huge amount of burning".

Right. *Capitalism* didn't change the world from one that could support under a billion people, mostly in poverty, to one that could support eight billion people, some of them middle-class. *Fossil fuels* and their application did, with all the accompanying costs. Nature spent hundreds of millions of years making and burying wealth for us; people developed the technology to rip more and more of it from the ground, and use it all for ourselves. Whether this was done under brutal capitalism (early Britain, early US), or under socialist/ capitalist mix (modern Europe and US), or under government dictatorship (the USSR, China), it has led to material gains because we're using up vast resources that weren't available before. All the systems work as long as the resources are in play.

Capitalism created the intercontinental slave trade with its 50% death rate; slave plantations with their under-five-year life expectancy in the Caribbean; and race slavery. It is both true and irrelevant to point to less massive, less brutal, non-race-based forms of slavery that existed before it; and the abolition of slavery was ANTI-capitalist, people acting out ideals at no particular profit against the resistance of the plantation owners and their Senators.

Capitalism created factories with 16-hour workdays and locked factory doors to prevent escape. Labor unions, and their supporters in the general population, created weekends, insurance policies, and retirement packages, and often faced violent resistance in their attempts to do so. But capitalism still creates 16-hour workdays and locked factory doors to prevent escape, in the places it is allowed, with police and army support, to do so.

I'm also tired of hearing that poverty has been reduced, because there's as much falsehood as truth to that. 60% of the people in the world -- that's almost five billion people -- live on less than $7.40 per day. I am aware that the United Nations does not consider $7.40 per day to be poverty. But have you tried living indoors, feeding yourself nutritiously, and getting adequate medical care on that sum?

I have a middle income in a tremendously rich country, and I love having the Internet (designed by government scientists and nonprofits), computers (designed by government scientists), a rich variety of food options (mostly corporate-sold, transported across government-build roads), and access to toys (mostly private-market), libraries (government), and health care (wish it was government-provided). I try to live an eco-friendly existence, by the standards of my time and place, but I'm still using up minerals, fuels, water, and fertilizer I won't replace. I have zero interest in crediting capitalism, as a system, with my comfort. I like small record labels and small presses, and am happy when they make money. Any of the Fortune 500, I would happily watch be separated into thousands of pieces.

Aonghus Fallon said...

‘This is what capitalism has excelled at after thousands and thousands of years of human failure at it.’

I’m not sure the primary function of earlier societies was to ensure an improved standard of living for its citizens. Most were pretty efficient according to their own criteria - e.g. the British Empire was hugely profitable in its heyday. I’ve never been entirely sure what people mean by ‘capitalism’ per se. I just see market forces, supply and demand, goods and services, things that have been a feature of most cultures since the days of ancient rome. It really only ever made sense as an ideology when contrasted with communism, which has definitely had its day. So I guess the notion of capitalism as an ideology is relatively new?

By extension, I think the cracks are already beginning to show - a good example is how women were encouraged to rear a family while also holding down a job, which inevitably meant that house prices went up (as two wages could now contribute towards a mortgage) making them unaffordable to single people. Now, I’m not denying a woman’s right to work. Just pointing out that in this particular instance, market forces actually resulted in a lowering of living standards - and not amongst the poor, but the middle-classes.

'Well, okay, but I am constantly being informed that workers are worse off. And that is simply false. And, quite frankly, obviously false.’

I guess context is everything? If one was to compare what management got paid in the 70’s and what a factory worker got paid, one might be earning approximately twice what the other earned. Nowadays, management tends to earn many multiples of what a factory worker earns - so in real terms, a factory worker is worse off than his predecessor. The cake may have got bigger, but the worker is getting a much smaller slice of it. Or - if you prefer - management is getting a much bigger slice.

Voxpoptart raises a few interest points, non?

Aonghus Fallon said...

My overall impression - and admittedly, this is coming from somebody with a pretty limited grasp of history - is that most empires etc have been driven by a capitalist imperative. Capitalism has been the prevailing orthodoxy for thousands of years. Socialism and Communism were a belated attempt to address the class and income disparities that were a characteristic of Capitalism. The postwar period in Europe, the UK and Ireland (and to a lesser extent, the US) was characterised by an attempt to address the threat that Communism represented to Capitalism - ie, to kill the (potential) revolution with kindness. Thus the rise of the welfare state, corporation flats etc. Once Communism flat-lined it was back to business as usual - although idealogical Capitalists will insist the threat is still out there, lurking in the shadows etc, largely to justify the inequities of modern Capitalist culture.

Andrew Stevens said...

Right. *Capitalism* didn't change the world from one that could support under a billion people, mostly in poverty, to one that could support eight billion people, some of them middle-class. *Fossil fuels* and their application did, with all the accompanying costs. Nature spent hundreds of millions of years making and burying wealth for us; people developed the technology to rip more and more of it from the ground, and use it all for ourselves. Whether this was done under brutal capitalism (early Britain, early US), or under socialist/ capitalist mix (modern Europe and US), or under government dictatorship (the USSR, China), it has led to material gains because we're using up vast resources that weren't available before. All the systems work as long as the resources are in play.

You and Aonghus Fallon are making similar errors. Capitalism is a "bottom up" system rather than a "top down" system. Nature put a lot of stuff in the ground. It isn't wealth until someone moves it from a lower valued to higher valued use. All that coal and other fossil fuels had been there for millennia. China was the pre-industrial leader in the use of coal, but the Industrial Revolution - which could have happened at any time over thousands of years - does not happen until capitalism develops in the United Kingdom. This is because governments always have a vested interest in maintaining the status quo and so capitalism was always carefully constrained, circumscribed, and people were prevented from creating a lot of wealth. Sure, you get an occasional merchant republic (and the merchants then immediately moved to lock out competition from incipient merchants) or a Jakob Fugger here and there. But it's not until capitalism unleashes innovation on a wide scale (beginning in the UK and Holland and then being implemented in the various British colonies) that people's lives start massively improving. The mistake here is the assumption that all of that innovation would have happened anyway, but we have thousands of years of evidence to show that it didn't. It took something of a miracle in northern Europe for it to happen, because the English and Dutch governments had become so weak. Then Adam Smith came along to explain why the peoples of those nations had also become so rich.

Capitalism created the intercontinental slave trade with its 50% death rate; slave plantations with their under-five-year life expectancy in the Caribbean; and race slavery.

The Spanish colonies were no better than the British ones, perhaps even worse in some ways. (In other ways, they were better, due to their Catholicism. A slave could often escape slavery simply by converting.) Capitalism eventually became key to ending slavery because it was economically inefficient. (Yes, I am aware of the research claiming otherwise, but in the U.S., it was the North that was the economic power, not the South, which is why the North won the Civil War. It does so happen that in the mid-19th century, the invention of the cotton gin and the unusually high price of cotton at the time stopped slavery from being unprofitable, but please do note that the cotton gin was invented by a Yankee and the South still couldn't keep up with the North economically.) I do agree that capitalism itself was not the main driver of the elimination of U.S. slavery. That was unquestionably a moral crusade via certain branches of Christianity (the Quakers originally, eventually joined by the Puritans who became very uncomfortable with slavery about the time of the American Revolution).

Andrew Stevens said...

the British Empire was hugely profitable in its heyday

They were not profitable because of Empire. They about broke even on India, but lost money everywhere else. Indeed, India is about the only colonial project which wasn't a big money-loser for any country. The gains realized from trade and exploitation of natural resources were never worth the costs in blood and treasure the colonial powers used to obtain them.

I'm also tired of hearing that poverty has been reduced, because there's as much falsehood as truth to that

No. All you demonstrate with your subsequent sentences is that poverty is still not eliminated. I care about that as much as you do. The answer, in my opinion, is more capitalism. E.g. Ghana under Khufuor, Rwanda under Kagame.

Capitalism created factories with 16-hour workdays and locked factory doors to prevent escape.

The 16 hour days was a real thing, absolutely. Before capitalism, people were living miserable lives in subsistence farming or were simply dead because the world couldn't afford them. The reason why 18th and 19th century London is filled with poor people is because they aren't dead. I am sure there were locked factory doors here and there. We are both in complete agreement that this is slavery and should have been (and should be) illegal. But people kept coming back to their jobs the next day. In a pre-capitalist world, they would have simply starved. Eventually countries become so wealthy that this sort of thing can be eliminated (and, sure, labor unions were one way - I am in fact quite pro-union).

I have zero interest in crediting capitalism, as a system, with my comfort.

Well, yes, that is quite obvious.

I like small record labels and small presses, and am happy when they make money.

Small businesses are the very beating heart of capitalism. Big businesses are often creatures of the state, particularly in nations like Russia, China, or Brazil, which are "crony capitalist" nations (but that's still way better than most other alternatives!), but even in the U.S. that is often true. "Regulatory capture" and all that. However, I am not defending some ideal system of perfect capitalism which only exists in my imagination. I am willing to take the blame for the failures and evils of capitalism as long as you are letting me compare it to some other actually existing system and not some utopia which exists solely in your imagination.

Andrew Stevens said...

To clarify a bit, do I think the world would be better off if big businesses were not allowed to engage in regulatory capture? Yes. Do I think this is actually possible? Probably not.

For generations, the large majority of Americans worked at small businesses. This has been changing ever since the financial crisis and more and more Americans do now work for big companies (and fewer for small ones, though this has been due principally to a big rise in mid-size companies). This may very well be a result of increased regulatory capture and I believe that it may be a worrisome trend, though I also could be wrong. I work for a big company myself and I certainly can't complain.

Andrew Stevens said...

Andrew Stevens is giving the standard talking points -- ones I heard over and over while earning an honors Economics degree -- about how "Capitalism is the only thing we have ever known which has actually reduced [poverty, slavery, inequality etc]".

Did you ever consider that the experts who told you this over and over while you were earning your economics degree might actually have been right? (Congrats by the way. If you earned an honors degree in economics, I am sure you're no dummy.)

Aonghus Fallon said...

I’m curious about what you mean by capitalism, Andrew. Also, how you think the modern version differs from its equivalent in the middle ages. I mean, we’re just talking about economics, right? Money? Money can fund research. It can also be used to resist innovation and to prop up moribund and dangerous business practices - e.g. the fossil fuel industry. Just look at the power of lobbyists in the States. The idea that it’s a key driver in innovation doesn’t seem to be born out by the facts. The US came ninth in a list of most innovative countries last year, while Germany came first (a social market economy, in case you were wondering).

Andrew Stevens said...

I agree that capitalism has always existed. The Arab trader who travels through Africa, selling cloth (or whatever) for gold is a capitalist. That person is also creating wealth by moving the cloth from a place where it is lower valued to a place where it is higher valued and moving the gold from a place where it is lower valued to a place where it is higher valued. Trade is the essence of capitalism. The definition of capitalism I would use is "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."

You can see why this has been so unpopular with states over the millennia! Capitalism creates another locus of power which is not under the control of the state. Which is why governments have worked hard over the millennia to either suppress it or co-opt it and are still doing so to this day.

The US came ninth in a list of most innovative countries last year

Look, we all know this is not true. It's just European pride which looks around for some way to make it true. All of the great innovations of the twentieth century were driven by the United States. It is absolutely true that there are, of course, great innovators in Europe. Tim Berners-Lee was able to take a bunch of American inventions and combine them into the World Wide Web. I hope he got rich off of it. He might have, but in part, that's due to the existence of the American market.

I don't know how one would actually go about measuring "innovation." I can think of a few dozen ways off the top of my head and the results would all probably be wildly inconsistent with each other. E.g. this link, which puts the U.S. third to Switzerland (which may well be the most successful country per capita on earth, I freely grant) and Sweden (I am guessing that if we compared to Swedes to Swedish-Americans, there would be no real contest). Germany doesn't even rate. I'm not defending this measure. I haven't even bothered to read what the methodology was, because I don't really care. I think "innovation" is even harder to measure than "productivity."

Andrew Stevens said...

For the record, I would be quite happy if China completely abandoned its bad European ideas, returned to Confucianism, and became an economic powerhouse which absolutely dwarfed the U.S. That would be good for everybody! I would feel no particular national shame if that happened. Your good fortune is my good fortune.

Andrew Stevens said...

(Yes, there was even capitalism in the Soviet Union. It was called "the black market.")

Andrew Stevens said...

Oh, I also don't blame any Brit who hates the U.S. We have been at times a rather brutal superior, squeezing the UK economically after WW2 to force them to give up their Empire, dictating how the Suez crisis would be handled, etc. I imagine it's primarily British Tories who resent us for those reasons, but still....

Aonghus Fallon said...

‘All of the great innovations of the twentieth century were driven by the United States.’

Well, I know a Scot invented TV. The jet plane was an English-German thing. Marconi invented radio. The combustion engine was a - mostly - European invention. I’d give the US home computers, maybe? But then the Brits built the first stored-program computer. At the moment I’d see Asia as the prime innovators - certainly when it comes to taking an existing invention and stream-lining it.

My impression - rightly or wrongly - is that the US imports a lot of a talent (or these people are attracted by the amount of money available for research).

Aonghus Fallon said...

Plus, most people would reckon that German engineering is second to none.

voxpoptart said...
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voxpoptart said...

Andrew Stevens left multiple replies to my comment. I'd rather leave one coherent reply back to him, so I've deleted some hasty attempts that I wrote before realizing he had done so.

Stevens tells us "the Industrial Revolution - which could have happened at any time over thousands of years - does not happen until capitalism develops in the United Kingdom". This imagines that there was no progress for thousands of years, followed by progress. In fact, technological innovation was ongoing. The Industrial Revolution occurred after a variety of revolutionary changes in farm technology, housing technology, animal breeding, mill development, paper-making, printing, mathematics, explosives, and metal working over the prior millennium. Some of that progress happened in China, some in India, some in Arabian nations, some in European and African nations, under a wide variety of ideologies.

Contrarily, Stevens tells us capitalism has always existed. That nicely covers the bases if you ignore the contradiction. But capitalism has not always existed. Nothing even resembling capitalism existed in pre-monetary societies, which anthropology and paleontology both strongly suggest tended to have higher lifespans and healthier populations than most of their successors until the twentieth century. Barter existed; personal profit didn't. (I wouldn't want to live in *any* pre-20th-century society, monetary or pre-monetary, because I am spoiled and I like modern comfort. Nobody had modern life expectancies until sewer systems and germ theory became standard. Sewer systems are provided by government.)

I do think merchants have played an important role in spreading ideas across societies. So have writer/ wanderers like Marco Polo or Lewis & Clark. So have raiding warlords. So have government road-building and railroad-building operations. I do not believe it is necessary to value each approach equally, even though all have contributed.

I think I have a big issue with part of Stevens's definition of capitalism. He offers "An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state." Everything before "rather than" is fine. But those are not the only two options. Why not, as much as possible, decentralized control by workers and communities themselves?

In my opinion, a democratic state is still necessary to provide resources for common use, and protection against larger threats (environmental, military, corporate, pandemic). I personally would also be happy for it to provide health care, since that seems to work well in countries that do it. (I live in the USA. My former American friends who now live abroad have send amazed reports.)

But assuming that workers need "owners" is, for a lot of us, the root of the problem. The thing I like about so many small magazines, record labels, local restaurants, etc etc, is that the good ones tend to be passion projects. I root for them to make money because, in a capitalist society, they need to in order to continue. But in a non-capitalist system, I think most of them would exist, purely from the owner's desire that they do so. So would many others, started by people who didn't need to work exhausting days at spiritually deadening (sometimes abusive) jobs in order to be allowed to live indoors and eat regularly.

Stevens asks whether I believed everything my economics professors told me. Some of them were great. Some of them I learned from because I had to. The ones I had least use for were the ones whose lessons depended on graphs in which people only work for pay, in which pay measures the value of work, in which everyone gets their money's worth of "utility" when they buy something, and in which all salaries are the result of contracts freely agreed to by worker and owner with equal decision-making power. They were the ones thanking "capitalism" for everything. What world they lived in outside of class, I never knew.

Brian B. said...

A short reply to Aonghus: I think you’re making a lot of good points. One thing you suggest tentatively: “Most empires have driven by a capitalist imperative”. You’re very much right — at least in terms of colonial empires— as long as we mean “by a desire to amass profit”.

Stevens wants to me compare the British and Spanish slave trade during the New World rush: both were capitalist, as far as I’m concerned. The people who kidnapped the slaves, the people who shipped them, and the people who bought them all did so for a profit.

Aonghus Fallon said...

I guess my issue is that Stevens has still to define what he means by ‘capitalism’. To say countries with functioning economies are often more innovative than, say, authoritarian regimes, is not really much of a clarification. Maybe if he defined what he meant by a capitalist country and what he regarded as not being a capitalist country plus the spectrum in between?

‘But in a non-capitalist system, I think most of them would exist, purely from the owner's desire that they do so. ‘

One example would be the arts in the US. In the Fifties you had a lot of artists who produced work as an end in itself. The beatniks would be a prime example. The Sixties generation monetised what the previous generation had done. I’m not sure that they necessarily produced better work. It was certainly more commercial.

Aonghus Fallon said...

Sorry, Brian - I just saw your comment. I entirely agree.

Aonghus Fallon said...

If I was to hazard a guess, I’d say the biggest catalyst for innovation is war, or the prospect of war.

Andrew Stevens said...

My impression - rightly or wrongly - is that the US imports a lot of talent

Absolutely right. It is not native American talent that drives their innovation; it is the system. It is the ability of ordinary people to profit from their innovations that has unleashed the huge improvement in living standards, etc. I don't believe the 19th century British were smarter than everyone else either, but they were certainly the most innovative. The pace of innovation was so large in Britain (and eventually in the U.S.) because of capitalism. Check the 19th century American entrepreneurs - Rockefeller, Carnegie, Ford, Vanderbilt, etc. How many of them were born rich? Only J.P. Morgan who managed to improve on his father's family business of banking. The rest were all born poor, some quite poor. This is not nearly as true in recent years, but that's primarily because they're aren't many poor people left so the entrepreneurs now generally come from the much larger middle class.

Andrew Stevens said...

One example would be the arts in the US. In the Fifties you had a lot of artists who produced work as an end in itself. The beatniks would be a prime example. The Sixties generation monetised what the previous generation had done. I’m not sure that they necessarily produced better work. It was certainly more commercial.

"Nobody but a blockhead ever wrote for anything except money." - Samuel Johnson

Yes, it is true that you can find a small number of people who invent/create things purely for the love of it. Most people do so to make money. When you cannot hope to improve the lives of yourself or your children by inventing/creating things, a much smaller number of people will bother.

Andrew Stevens said...

If I was to hazard a guess, I’d say the biggest catalyst for innovation is war, or the prospect of war.

Just more attention-getting, in my opinion. Warfare innovations are not as useful as people think anyway. Nuclear bombs make terrible consumer goods.

Andrew Stevens said...

Stevens wants to me compare the British and Spanish slave trade during the New World rush: both were capitalist, as far as I’m concerned. The people who kidnapped the slaves, the people who shipped them, and the people who bought them all did so for a profit.

The Spanish did not sell slaves to foreign colonies. The British and the Dutch did. I accept that the British slave trade was capitalist; the Spanish system (which preceded the British) was not. The Spanish also greatly reduced their role in the slave trade at a time when it was still profitable for the British and Dutch (and presumably would have been for the Spanish). My point is simply that the intercontinental slave trade did eventually get taken over by the capitalists, but it began with Spain and Portugal, who were not capitalist. The government controlled the slave trade.

Andrew Stevens said...

Maybe if he defined what he meant by a capitalist country and what he regarded as not being a capitalist country plus the spectrum in between?

All countries on earth today or that have ever existed are mixed systems. How much of the trade and industry is in private hands versus how much in government hands? The more that is in private hands, the more economically successful those countries are (yes, even for ordinary workers). The more that is in government hands, the less economically successful those countries are. Democracy does not appear to have changed this. The European countries became more capitalist in self-defense so that their entire population would not flee to the U.S. E.g. Sweden. But it is a consistent pattern everywhere: East Germany and West Germany, North Korea and South Korea, Hong Kong and China, Japan, etc.

Andrew Stevens said...

The U.S. government did put a man on the moon. Well done. But that was enormously expensive and didn't really get us anything. (Yes, yes, I have heard the argument about "spin-off" technologies. There were some, but my goodness, the Apollo Project was expensive. I am not here actually stating that we should not have put a man on the moon. I think you can make arguments both ways.)

Andrew Stevens said...

I also agree, by the by, that drug dealers are capitalists. I am not saying everything people do for profit is a good thing or even that it all should be allowed. I am just talking about what system is superior for rank and file ordinary people.

Andrew Stevens said...

(My favorite character in The Wire was Stringer Bell, played by Idris Elba, a drug dealer who took business courses and had Adam Smith's The Wealth of Nations on his bookshelf. Of course, Stringer Bell was not meant to be a hero, nor did I take him as such.)

Aonghus Fallon said...

‘Absolutely right. It is not native American talent that drives their innovation; it is the system.’

Maybe you could clarify this? Or cite specific examples? I appreciate that America may have presented greater opportunities to humble immigrants in - say - the 19th century and the first half of the 20th, but would that be as true now as it was then?

‘I don't believe the 19th century British were smarter than everyone else either, but they were certainly the most innovative.’

As an Irishman, I’m probably biased, but I don’t think the British Empire’s success was due to a talent for innovation. A talent for organisation, a willingness to form hierarchies (and to respect and work within those hierachies) and a certain brutal common sense, maybe. But innovation? Not so much.

‘Just more attention-getting, in my opinion.’

Not at all. The internet was originally the property of the US defence. The idea was that if one group of computers was destroyed by a nuclear strike, information could be quickly relayed to a secondary group, and so on and so forth.

‘The Spanish did not sell slaves to foreign colonies.’

Not sure why this precludes them being capitalists? You make the distinction that the Spanish government controlled the slave trade. I’m guessing you’re applying the strict capitalist criteria that any goods of value have to be in private hands rather than owned by the government? But even if the Spanish government controlled the slave trade, they did not own the slaves themselves.

‘The European countries became more capitalist in self-defense so that their entire population would not flee to the U.S.’

I can imagine a lot of Europeans wanting to flee post-war Europe (also how it ended up ‘more capitalist’ given that most of it was rubble at the time) but most people I know are deeply ambivalent about working the US. Trump, guns and no real safety net, basically. Nowadays, Irish emigrants generally go to Canada.

Weirdly enough, I did one of those tests online - the one where you find out which TV character you most resemble - and it was Stringer Bell. Go figure.

Andrew Stevens said...

I appreciate that America may have presented greater opportunities to humble immigrants in - say - the 19th century and the first half of the 20th, but would that be as true now as it was then?

Not nearly as great now, no, the rest of the world has become much more capitalist, thus narrowing the gap. To give an example of innovation, I would use Thomas Edison. Edison was a greedy bastard, that is true. Edison was also not nearly above stealing other people's inventions. That is also true. But what Edison could do - and did better than just about anybody else - was take an invention, the incandescent light bulb, say, and make it commercially viable. Constantly improving it, thinking about what the customer would want out of it, etc. This was the U.S.'s major advantage in the second half of the 20th century (and probably still is to this day) - the ability to take innovations and make them practical and mass produce them for everybody.

Not sure why this precludes them being capitalists?

If they were motivated by profit, they would have. But they weren't motivated purely by profit. As for the Spanish government owning the slaves themselves, at the beginning they actually did. It isn't until about 1790 that private plantation slave owners began to flourish. Prior to that, the colonies were at least very highly intertwined with the Spanish government.

I can imagine a lot of Europeans wanting to flee post-war Europe

I was talking about 19th century Europe. Thus my link to how early 20th century Sweden set up a whole commission to study the matter and explicitly decided what they needed was more liberalism. (The Crown and Church right in Sweden just wanted to make no changes and forbid emigration, but they lost.) This happened throughout Europe in the time period. After that, the U.S. itself imposed the Immigration Act of 1924, which restricted the flow of immigrants regardless of whether they wanted to come here or not.

and no real safety net

This isn't true, but the U.S. supplies its safety net primarily privately. After a medical procedure, for example, you talk to the hospital, so some paperwork, and they waive their fees. I have done this for poor elderly relatives of mine many, many times. Every pharmaceutical advertisement generally ends with "if you can't afford your medication, we can help." You can be excused for not knowing this sort of thing if your information about the U.S. principally comes from the media (including ours).

The internet was originally the property of the US defence

Eh. The innovations were not principally the military's. They just had a use for it before it became commercially viable. Once it does, it's going to be invented regardless of whether the DoD had set up its own first. Most of the innovations came from Bell Labs.

Andrew Stevens said...

*do some paperwork

Andrew Stevens said...

As an Irishman, I’m probably biased,

There are six times as many Irish people in the U.S. than in Ireland.

Andrew Stevens said...

I assume part of the reason for this was that the British suppressed capitalism among the Irish. In the same way, black business and entrepreneurship was doing very well in the late 19th century U.S. until white people used their political power to suppress it. That's what segregation and "separate but equal" was all about.

Andrew Stevens said...

(The North did it too, but more subtly.)

Andrew Stevens said...

Weirdly enough, I did one of those tests online - the one where you find out which TV character you most resemble - and it was Stringer Bell.

In my youth, I was flatteringly compared to the Phantom of the Opera more than once by young women. And the Phantom was a cold-blooded murderer. I'm sure it probably wasn't trying to tell you that you'd be a good drug dealer who got gunned down at a young age.

Andrew Stevens said...

The Heritage Foundation's Index of Economic Freedom is probably a decent way of measuring how capitalist a country is. But of course there's is a slippery measure with all sorts of arbitrary weightings, but I think that's probably inevitable. On the other hand, it seems to recognize the obvious.

Its top ten:

1. Singapore
2. Hong Kong
3. Australia
4. Switzerland
5. Ireland
6. Taiwan
7. United Kingdom
8. Estonia
9. Canada
10. Denmark

The U.S., reflecting its declining commitment to capitalism over the last 90 years, ranks 20th, mostly due to large amounts of government spending and extremely large amounts of debt.

Andrew Stevens said...

This imagines that there was no progress for thousands of years, followed by progress. In fact, technological innovation was ongoing.

Well, yes, but not much of it. Legumes were revolutionary in the Middle Ages. They also barely changed anything. There is not a whole lot of difference between ancient Rome and Italy 1400 years later. In fact, London doesn't finally surpass Rome as the largest city in history until 1800.

Andrew Stevens said...

Thought experiment: an ancient Roman of Caesar's time comes to Rome in 1400. What technological innovations (rather than cultural changes) will he find stunning? The pipe organ. I think that's about it.

Gavin Burrows said...

Does anyone remember when Andrew Stevens still sounded sane? It seems a while ago now…

There is simply way too much stuff to consider a point-by-point rebuttal, at least not if you also want to sleep and eat. And besides, it’s way too way out to engage with. The British Empire failed to make a profit? Makes you wonder why they bothered with it then. There is capitalism in Europe to stop everyone running off to America. But didn’t capitalism start in... oh, never mind.

No, I think it has come time to treat his comments the way Our Esteemed Host does the Daily Fail. No gain in responding to what they say, you need to dig into why they’re saying it.

As has already pointed out by Voxpoptart, there’s a bit of double-think afoot here. Capitalism is the cavalry which rode in to rescue us from lives of primitive penury, rummaging in the earth for turnips. See how bad things were without it! And yet it has always existed. Or at least as long as there’s been trade. (There were extensive trade networks in the Bronze Age. Was that capitalist? Was Stonehenge a proto shopping mall?)

But apologists for capitalism need to believe in both simultaneously. Capitalism equals dynamism, innovation, out-the-box thinking. It’s that or be mired in mental mud. There needs to be the threat of a bad example. But it also has to equal ‘human nature’ in order to claim that we can’t be non-capitalist if we wanted to.

And anything with state involvement is by definition non-capitalist, it seems. But if capitalism is trade, then clearly enough states trade. There has been rather a lot about international trade agreements in the British press of late. (Well, at least about the lack of them.) I’ve worked in both public and private sectors, and can say I detected an essential continuity between the two.

‘State capitalism’ became a handy shorthand for the Soviet model. But in one way it’s misleading. Throughout the history of capitalism, there has only ever been state capitalism. Rather than being two opposing things, their development is completely intertwined. The modern state, with its borders, regulations and (yes) trade agreements grew in synch with capitalism.

But again, this is needed. The state role in corporate welfare, in funding capitalist growth, in passing pro-capitalist legislation is always overlooked. In a particularly bad magic trick, the few quid to fund a homeless shelter is diligently pointed out, in order to point away from the wads of cash thrown at propping up profits.

And the state makes a good fall guy. Even for state politicians. Especially for state politicians. In Covid-hit Britain we had the disaster of the private-enterprise Test and Trace system, followed by the well-run inoculation programme. Yet it was the first one the Government continually, and entirely wrongly, referred to as ‘NHS’. They rarely if ever call the inoculation programme NHS, which it was, in order to take the credit themselves.

Andrew Stevens said...

Makes you wonder why they bothered with it then.

National pride. 19th century colonialism is quite insane. The number of times European countries risked war with each other over nearly valueless areas in Africa is simply crazy.

There is capitalism in Europe to stop everyone running off to America. But didn’t capitalism start in...

Capitalism started in Britain and Holland. The U.S. took the idea and ran with it. And the U.S. was willing to take huge numbers of immigrants from the non-capitalist countries in Europe who then . . . became more capitalist in self-defense (Sweden did so quite explicitly as did other European countries).

And yet it has always existed. Or at least as long as there’s been trade.

Sigh. Governments throughout history, usually with the goodwill of the people themselves, suppressed or co-opted capitalism. What happened in England and Holland is that the governments became too weak compared to the ordinary people.

in order to claim that we can’t be non-capitalist if we wanted to

We certainly can! It just has never worked nearly as well.

But if capitalism is trade, then clearly enough states trade.

States certainly do trade. Mostly weapons. There are also state industries (oil companies, very frequently) which trade. The vast majority of trade is not being done by the state but by private individuals although trade deals certainly regulate how private citizens are allowed to trade with each other.

‘State capitalism’ became a handy shorthand for the Soviet model.

That phrase is actually just a way for non-capitalists, mostly self-proclaimed socialists, to try to blame the failures of their system on capitalism. But the whole reason why capitalism works is because it is "bottom up" and is a way of solving Hayek's "information problem." No matter how good and wise the people in charge are, they simply aren't good or wise enough to dictate an economy.

in order to point away from the wads of cash thrown at propping up profits.

This does happen, of course. I have talked often about "crony capitalism" and governments throwing money at private actors in order to benefit them as well as "regulatory capture," etc. In case you hadn't noticed, I'm opposed to these things. (Though I do accept that they will happen in any country with a state and you need a state to keep order. We've tried private policing; it just didn't work. So I accept as inevitable some amount of this sort of corruption. We're never going to completely eliminate it; we just need to try to mitigate it.)

Andrew Stevens said...

No worries though. I realize my beliefs are very complicated and nuanced.

You actually remind me of a friend of mine who will often ask, "Why would someone do that? It makes no sense." My response is always, "Well, sure, but they did do it. What makes you think human beings are rational? Most people can only be trusted far enough to act in their own self-interest. The rest can't even be trusted that far."

Andrew Stevens said...

A nuanced view of Hayek's "knowledge problem" for those who don't know it is here.

Without markets, how do we know how much of each good to produce? How do we solve the problem of when the costs are too great to be worth it? Will we even notice an unmet need which could be met? Decentralized systems have answers to these problems which just aren't possible in centralized systems.

As for Mr. Burrows's preferred method of bottom-up organization - worker-owned cooperatives - I have no objection to them whatsoever. Indeed, I regard those as capitalist institutions. My skepticism about them is that, in my opinion, they aren't particularly disfavored so if they really worked better than corporate structures, I would expect them to be a much larger part of the economy than they are. However, perhaps Mr. Burrows could convince me that government action deliberately suppresses such institutions and this is why they have not had much purchase.

Andrew Stevens said...

(I have in the past already given my own theory on why worker-owned cooperatives do not flourish. It is based on risk management - workers would then have too much of their risk concentrated in the company they work for. This is the reason why I do not own any stock - or hardly any - in the company I work for, even though they keep giving it to me and/or allowing me to purchase it at a discount.)

Andrew Stevens said...

A little personal finance advice, by the way. I do purchase as much as I am allowed to at a discount, but then I turn around and immediately sell it and re-invest the proceeds elsewhere.

Andrew Stevens said...

As I previously pointed out, why did the British give up their Empire? Because the U.S. squeezed them financially after WW2 to force the issue. Had the Empire been profitable, this obviously could not have worked. Even in India, where the British Empire did reasonably well financially, the problem was that Gandhi raised the costs for them (and, yes, also morally shamed them).

I imagine that British government officials, when they had to give up India, felt quite diminished. But, if they were smart, they also felt relieved.

Andrew Stevens said...

To paraphrase my argument: "If all you want is to get rich, be Switzerland."

Andrew Stevens said...

Oh, I do agree that worker-owned cooperatives also fit the definition of socialism (workers owning the means of production). It doesn't bother me that an institution can be both socialist and capitalist. It is when ownership is in the hands of the state that it is socialist, but not capitalist. I.e. the Soviet Union was socialist (at least in theory), but not capitalist.

Andrew Ducker said...

In the UK Sharesave schemes are basically tax free, and excellent value.

I agree about worker cooperatives. Personally I think that the German model works pretty well, where the company has to have worker representation, and the unions can't just be anti-boss, they have to get involved in the hard decisions.

Andrew Stevens said...

For what it's worth, I don't believe that empire was unprofitable (usually with a rare exception here or there) is a particularly controversial point among economists, though I'm sure you can find dissenters. Patrick O'Brien, Davis and Huttenback, etc. The most persuasive counterpoint appears to be Avner Offer's. And basically he just argues, "Well, why did people invest in the colonies?" My answer would be twofold: 1) the sophisticated economies at the time were very largely investing in each other, not in the colonies - the investments in the colonies were dwarfed by, for example, British investments in the U.S. and 2) because they were paying for the protection of the British Navy anyway and as long as those costs were being borne by the government, they could still make some profits - which didn't offset the costs that the government was spending - but which flowed into their private purses. (Even if, in a perfect world, these investors would be better off not living in an Empire.)

Andrew Stevens said...

To clarify, I brought up O'Brien and Davis and Huttenback as the people who have persuasively argued that Empire was unprofitable. Avner Offer was my only example of a dissenter.

Personally I think that the German model works pretty well, where the company has to have worker representation, and the unions can't just be anti-boss, they have to get involved in the hard decisions.

I don't know much about that, but as I've said before, I'm pretty pro-union so this sort of thing would be fine with me. I work for a big American company; I don't think there are any ordinary workers on the board. But if someone said that the company was not run, to some extent (actually to a very large extent), for the benefit of its employees, I wouldn't even know what to say to that. It's very obvious to me that it is.

Andrew Stevens said...

In the UK Sharesave schemes are basically tax free, and excellent value.

Ah yes! A quick look at the Wikipedia page and they appear very similar to U.S. ESPP (Employee Stock Purchase Plans). I strongly recommend taking advantage of them. Ours are not tax free (I wish they were), but even so the risk is very small compared to the post-tax gains you typically make.

Gavin Burrows said...

"I agree that capitalism has always existed. '

"Capitalism started in Britain and Holland."

"I realize my beliefs are very complicated and nuanced."

Yes I suppose that must be it.

Andrew Stevens said...

(Also, for Mr. Burrows, my ideas on economics are, in fact, pretty mainstream within the professional economic community. Just as my ideas on philosophy are pretty mainstream within the professional philosophical community. This can be easily determined to be true without a whole lot of research. If they sound "insane" to you, there's not really a whole lot I can probably do to help you with that.)

Andrew Stevens said...

"I agree that capitalism has always existed. '

"Capitalism started in Britain and Holland."


Sigh. Britain and Holland were the first countries to become predominantly capitalist.

Andrew Stevens said...

Even in the merchant republics (which also saw quite a lot more innovation than the surrounding areas previously had), the big families of merchants used their political power to keep new rivals from emerging.

voxpoptart said...

Andrew has written a lot, mostly not in response to me. But I have one small and one large reply to him.

Small: everyone involved in Spain's slave trade was doing so for personal profit. Therefore, it was capitalist. That the slave capturers normally *used* the slaves to make money, instead of *selling* them to make money, is irrelevant; the point was profit, and the cruelty was the means.

Large: Whether or not European nations did, in fact, make a profit on their colonial empires is also irrelevant. The goal was profit; the laws were designed to extract resources at minimal cost, import workers at minimal cost, and guarantee a profitable market. A capitalist company that loses money is a capitalist company.

It's not necessary to my point, but I will say that on their own terms, all of the colonial policies were extremely profitable, speeding the colonial nations forward in material goods while stripping the colonized nations of resources. There is absolutely a strong argument to be made that other kinds of costs -- military and environmental, in particular, and inflationary in Spain's case -- actually put the whole enterprise into the red. I teach history and math for a living, but even for me the details of those calculations are beyond my pay grade. But in-and-of themselves, colonial policies reduced direct costs and increased customer base. Capitalism all the way, with all its staggering human damage.

Andrew Stevens said...

Just for Mr. Burrows's edification.

everyone involved in Spain's slave trade was doing so for personal profit. Therefore, it was capitalist.

A government acting for its own profit is not capitalist by definition. If the only criterion for capitalism is to be in search of profit, then I'm not sure how virtually everything isn't capitalist except pure philanthropy. We wouldn't be arguing about when capitalism came about since everybody has pretty much been capitalist since the dawn of time.

all of the colonial policies were extremely profitable, speeding the colonial nations forward in material goods while stripping the colonized nations of resources

Even that doesn't appear to be true, with again the possible exception of the British looting of India. Long term, this did not work out so well. Simply investing in and trading with the indigenous peoples would have been a much better strategy.

But it also depends on how it was done. The British colonies in what is now the U.S. probably were good for the British (as well as for the colonists themselves) until the British government decided to extract too much profit from them via very high levels of taxation to pay for the British standing army circa about 1765 and then the whole thing backfired spectacularly. (Recommended reading: As If an Enemy's Country by Richard Archer about Boston in the pre-Revolutionary War period.)

Andrew Stevens said...

Did the British actually learn anything from their experience with the American colonies? Maybe. They did treat their remaining English ethnicity colonies (Australia, New Zealand, Canada) better, but ultimately I'm not sure they did learn the lesson anywhere else. This is because people historically do not learn lessons and are not good even at determining what is in their own self-interest, never mind what is in everybody's interest.

Andrew Stevens said...

the point was profit, and the cruelty was the means

Feudal lords also oppressed the serfs for their own profit. Does feudalism equal capitalism? Ancient Rome used slaves to row galleys and operate mines for the profit of Rome. Was ancient Rome a capitalist society? Your definition of capitalism just seems to be so expansive that I suspect most of the things you favor would in fact be capitalist by it. (Unless your goal is actually to make all of society poorer.)

Andrew Rilstone said...

"There is simply way too much stuff to consider a point-by-point rebuttal, at least not if you also want to sleep and eat. "

If only there was a word for this rhetorical device.

voxpoptart said...

Stevens: the Spanish state did not own slaves. (Most likely you could find exceptions.) Individual explorers, conquistadors, and hacienda owners owned slaves. When you claim personal ownership of land and workers, and use them as capital, yes, that seems plenty capitalist to me.

And when I specify that colonialist policies were designed with the goal or profit, and were profitable *on their own terms* whether or not they cost overall loss of money when other things were factored in, it is completely irrelevant to compare them to what "would have been a better strategy".

Don't feel strongly yes-or-no about your question about "was feudalism capitalism?". A CEO and a feudal lord are both equally inaccessible and unaccountable to workers, and equally undemocratic. They approach their jobs with different expectations, and that could be enough reason to give them different labels (as in fact, when teaching, I generally do). I'm opposed to both for pretty much the same reasons, though.

Brian B. said...

Also, one final point (Stevens made dozens and dozens so I hope that’s okay): socialism is control by workers (and communities). A totalitarian dictatorship, such as the Soviet Union or China, is therefore not socialist.

A totalitarian dictatorship is, like a feudal lord or a corporation, one more form of “everyone works for their unaccountable boss”. “Dictatorship of the Proletariat” was sometimes a sincere and self-deluding lie, especially in the early days. And the Soviet lie fooled some real overseas socialists, years longer than it should have. But it always a lie: the Proletariat never had any say.

Andrew Rilstone said...

Have you read Marx?

Yes, but the doctor prescribed some ointmen and they are clearing up nicely.

Andrew Rilstone said...

Freud meets Jung at a conference.

"In your opinion" says Freud "What comes between fear and sex?"

Jung thinks for a moment. "Funf" he replies.

Gavin Burrows said...

The question was “aren't you simultaneously insisting that capitalism always existed and that when it began everything got better?” Given that the answer to that was “yes”, I’m not sure why you didn’t just type “yes.” No-one is paying you by the word, are they?

”If only there was a word for this rhetorical device.”

Does this one have a word for it? When you acknowledge the obviousness of a point, but only as a means to dismiss it. Where you say, for example “of course it is true that modern states and capitalism are interwoven, and states themselves even trade. Everyone knows that so we don’t need to think about it. Now let us get back to my point about states and capitalism being entirely separate things.” Asking for a friend.

Brian B. said...

Freud meets Noah Webster at a conference. “In your opinion” says Freud, “what comes between fear and sex?”

Webster flips quickly through his most famous book. “Fun!”, he says. Or possibly “Hailstones!” or “Mercantilism!” or “Rutabaga!” They’re like half the book apart.

Brian B. said...

Apparently I am “Brian B” from my phone and “voxpoptart” from my desktop. Ok. Perhaps at some point I’ll figure out how to resolve that. Perhaps.