Larger Pie: A book by Joel L. Swerdlow

Slow Beginnings and then Sudden Change

To appreciate the significance of economic growth, one need only glance at the long-term history of what we call human civilization.

“No city or monument is much more than 5,000 years old,” historian and essayist Ronald Wright explains in A Short History of Progress (2004). “Only about seventy lifetimes, of seventy years, have been lived end to end since civilization began. Its entire run occupies a mere 0.002 per cent of the two and a half million years since our first ancestor sharpened a stone.” (p. 55) (more…)

Do This Simple Test

Imagine a typical farmer in England during the early 1600s, when William Shakespeare was still writing plays.

Now, transport that farmer in a time machine to a typical farm the U.S. when Thomas Jefferson was President (1801-1809).  Would there be any tools or machines he did not recognize?  Would he be able to use the “modern” rifle owned by the American farmer?

Shakespeare to Jefferson is 200 years and not much changed.

Next, imagine that Jeffersonian farmer traveling only 100 years to a typical American farm of the early 1900s.  How much would look familiar to him?

Evolutionary Changes in Humans

Thanks to improved nutrition (and knowledge about vitamins, etc.) people also started to become taller and larger (to be contrasted in future discussions with the current epidemic of obesity).

Look at the size (small) of a typical bed in George Washington’s Mount Vernon, or in the Petersen house (across the street from Ford’s Theater), to which a mortally wounded Abraham Lincoln was carried in 1865. To our eyes today, adult beds older than about 100 years often look like children’s furniture.

Evolution of humans, of course, continues. Calculating a generation as twenty-five years, we have had about 15 generations since “modern” industry emerged. A few evolutionary effects–e.g. previously infertile people now able to bear children; frequency of some hereditary diseases changed–are obvious.

Not so obvious (as we will discuss in detail), is what exposure to electronics is doing to the human brain, and in particular, our prefrontal cortex. Until the last few decades, neuroscientists saw the human brain as an isolated organ; now they focus on its “plasticity” and capacity to develop new connections throughout an individual’s entire lifetime.

Given this plasticity, what do electronics do to the brain? Columbia University psychiatrist Norman Doidge writes:

Electronic media are so effective at altering the nervous system because they work on similar ways and are basically compatible and thus easily linked. Both involve the instantaneous transmission of electric signals to make linkages. Because our nervous system is plastic, it can take advantage of this compatibility and merge with the electronic media, making a single, larger system. (The Brain That Changed Itself, 2007, p. 311)

For as long back as we can study, the human head (brain) has been at birth about 80% of its final, adult size–compared to most other mammals, whose newborns have brains that are much smaller, relatively, at birth. (Evolutionary biologist Stephen J. Gould theorized that for the human brain the limiting factor has been the width of female hips: the brain is about as big as it can get and still pass through a woman’s birth canal.  Asked why female humans did not evolve wider hips and give birth to bigger-brained babies, Gould laughed and said, “evolution is random; its purpose is not to make humans smarter.”)

In any event, a major mystery endures: fossil evidence indicates that our brain size has decreased since peaking at 1,500 cubic centimeters about 20,000 years ago.

Why, then, Did Economic Growth Begin?

To see economic growth as the product of  one long, inevitable trend–rather than as a dramatic and disruptive phenomenon–would be comforting because it would tell us that our lives today, with all their technology-induced triumphs and problems, are the product of large, long-term historic forces.

Instead, today’s scholars–most notably Jared Diamond, Joel Mokyr, and Nathan Rosenberg–variously conclude that we really do not know why economic growth emerged.
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The Discovery of America?

Ronald Wright notes that discovery of the Western hemisphere was key:

The Classical world had developed several kinds of machinery, including mine pumps; Hero of Alexandria invented a rudimentary steam turbine during Ptolemaic times, but if a working model was ever made, it remained nothing more than a curiosity, like the wheeled toys of Mesoamerica or the inventions of Leonardo da Vinci. China was making cast iron blast furnaces in the first millennium B.C. And Europe’s Middle Ages were also more inventive than generally recognized. None of these technologies ‘took off’ until after 1492. (pp. 177-178)

…We will never know when, where, or even whether the Industrial Revolution would have happened had America not existed.

My guess is that it would—but later, more gradually, and in a different way. It might have begun in China rather than Europe, or in both. But that is for the ‘what if’ school of history. All we can say is that things would have moved more slowly and been very different. The world we have today is the gift of the New World. (p. 115)

And it is worth noting that Karl Marx, while certainly not a reliable source for judgments about morality or how the world works, noted in The Communist Manifesto (1848):

The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonization of America, trade with the colonies, the increase in the means of exchange and in commodities generally, gave to commerce, to navigation, to industry, an impulse never before known, and thereby, to the revolutionary element in the tottering feudal society, a rapid development.

Even pre-19th century observers who wished the Western Hemisphere had never been discovered grudgingly recognized its economic lure.  In their collection of early writings, Was America a Mistake?, historians Henry Steele Commager and Elmo Giordanetti write:

One of the great, but forgotten, controversies of the eighteenth century had to do with the meaning of America. Was the discovery of America a mistake? Would mankind have been better and happier had the New Work never been discovered by the old? Did America add anything to civilization or to the happiness and well-being of mankind?  (N.Y.: Harper & Row; preface)

In the Early 1400s, China Could Have Discovered the “Eastern Hemisphere”

A side story here is interesting for the “what-if” factor and because it reminds us that even the largest and most powerful forces in history could have moved in another direction.

In the early 1400s, China sent forth fleets of “treasure ships” more than 400 feet long (the vessels Christopher Columbus would use as the century ended measured about 85 feet in length); indeed, scholars note that “at 7,800 tons, the biggest of these were three times the size of anything the British navy put afloat before the 1800s” (Kenneth Pomeranz and Steven Topok, The World that Trade Created. Armonk, N.Y.:” M.E. Sharpe, 1999, p. 40).

Written records, oral traditions and DNA evidence document that these ships reached the western shores of Africa.

They could have gone almost anywhere. China by then had been using the magnetic compass for more than 1,000 years. The treasure ships also had watertight bulwark compartments, balanced rudders, and stern posts–technological innovations, Louise Levathes notes in When China Ruled the Seas not “introduced into European shipbuilding” until 400 years later (N.Y.: Oxford University Press, 1994, pp. 81-82).

But after reaching Africa, the treasure ships turned back.  And by the 1440s, China’s rulers had ordered that all records about how to build ships with more than one mast be destroyed and that the penalty for building large ships would be death.

At play seems have been the attitude: We have no need to explore the outside world; we are the center of earth so anyone worthwhile will come to us.

Thus, China invested its naval resources into smaller ships that could patrol its coastline and rivers, which were particularly vulnerable given all of the nearby islands on which pirates and marauders could establish bases.

The memoirs of Ma Huan, a translator and navigator who went on three of at least seven treasure ship expeditions, indicates China’s prevailing attitude.  His book, published in 1444, is entitled The Overall Survey of the Ocean’s Shores.  “Shores” is the key word; China was most interested in following the shoreline, not in crossing the ocean.  As far as they knew, on the other side of the Pacific was Europe and anything they wanted from Europe–such as wools and furs–was arriving in plentiful supply by land and via what we now call the Indian Ocean. The fame of Chinese emperors, Ma Huan noted in his book, already “extended to the barbarians of the south and north, causing every person with a soul throughout the world, whether stupid or alert, to be imbued with their virtue and civilizing influence…”

But what if China’s ships had sailed across the Pacific Ocean and landed in today’s Peru or Chile?  What if they encountered the plentiful silver and gold of South America, that so enraptured the Spanish conquistadors in the 17th and 18th centuries?

That China would have coveted such resources seems beyond doubt; some studies indicate, for example, that more than sixty percent of all gold and silver eventually extracted by Spain wound up–through the global economy of the time–in China.

Would the direct infusion of resources from the newly discovered continent have pushed China towards leadership of its own form of a worldwide industrial revolution and what we now call “economic growth”?

We will, of course, never know because China did not cross the Pacific (notwithstanding the periodic publication of sensationalist books claiming that it did).

And China’s “treasure ships” wound up as a footnote in history–fascinating for the what-ifs and because by abandoning advanced shipbuilding, China became one of the few civilizations in recorded history to master and then abandon a technology.  Such willful creation of a technological dead-end has occurred only two other times (more on this later).

Religion: The Traditional, but Now Out-of-Vogue, Explanation

Now that we’ve seen that China could have been the source of modern economic growth, it is interesting to briefly note the most commonly accepted explanation for why such growth began in Western Europe and began when it did:  The Protestant religion.  Most cited is Max Weber’s The Protestant Ethic and the Spirit of Capitalism (1905) –his title says it all, even for the multitudes who have never read his work, which is increasingly obtuse and inaccessible to modern readers.

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A History-Changing Force: Quantification

In The Measure of Reality: Quantification and Western Society, 1250-1600, historian Alfred W. Crosby writes:

During the late Middle Ages and Renaissance a new model of reality emerged in Europe. A quantitative model was just beginning to displace the ancient qualitative model.

Then, between 1250 and 1350, there came, not as much in theory as in actual application, a marked shift. We can probably parse that century down to fifty years, 1275 to 1325. (more…)

The Most Important Reason: Technology

We’re now ready to focus on our chief candidate for Most Important Cause of Economic Growth: technology.

Technologies such as printing, Malthus wrote just as economic growth was beginning, generate “knowledge” and an “unshackled spirit of inquiry.”

Born less than fifty years after Malthus died, John Maynard Keynes eventually found such analysis unsatisfactory, (more…)

Technological Determinism and the Technological Imperative

Many people believe in technological determinism–that technology is a force unto itself shaping human society and propelling it forward.

But the social and cultural aspects of technology (more…)

“Creative Destruction” and “Disruptive Technologies”

Writing in the early 1900s, Austrian economist Joseph Schumpeter—borrowing from the Hindu god Shiva who is simultaneously the destroyer and creator—popularized the notion that the chief cause of the business cycle (more…)

The Sources and Dynamics of Technological Innovation

Understanding technological innovation is essential because economists of all academic and ideological persuasions today say it is by far the single most important factor driving economic growth.  Indeed, we will find a growing emphasis on technological innovation in places–such as arguments about the role of public education in society–where we least expect it.

But as we examine technological innovation, we’ll discover something strange: It definitely exists, yet when examined closely it shimmers and disappears. (more…)

The Ecology of Innovation

Technologies emerge from and change within what scholars now describe as a highly complex “ecology of innovation” (Clyde Prestowitz, Three Billion New Capitalists. N.Y.: Basic Books, 2005, p. 131).

The seminal academic work outlining this process is S.C. Gilfillan’s The Sociology of Invention (1935), published when most technologies that dominate life today were still in their seminal stages: (more…)

The Shipping Container: A Case Study in the Ecology of Innovation

The first shipping containers went into use on April 26, 1956.  As Marc Levinson reports in The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (2006), by 1958, significant increases in productivity quickly followed: (more…)

Government: Essential to Innovation?

A major question about this ecology of innovation is, we will find, at the core of policy decisions we must make today: What is the proper (most desirable) role of government?

To stay out of the way and let the “marketplace” work? Maybe, but what, then, can be learned from previous eras that had no “marketplace” as we know it today? What, for example, was the role of the government in major technological innovations that emerged from ancient Sumerian or Babylonian civilizations? A cursory examination of such societies indicates that the correct answer is, “not much.” Both writing and a numeric system, for example, seem to have emerged and persisted because of needs generated by trade. (Of course, government played a role to the degree it encouraged and facilitated trade.)

Likewise, Joseph Needham’s  definitive Science and Civilization in China books seem to conclude (Science & Civilization in China Volume VII: 2 General Conclusions and Reflections, Cambridge University Press, 2004 that literally thousands of inventions emerged and either died or caught on without any measurable impact from China’s  centralized leadership and massive government bureaucracy other than the obvious;  e.g. the central government’s capacity, often exercised inadvertently or unknowingly, to both stifle change and facilitate adoption of something new. “[T]he bureaucratic state had its own impetus,” Needham writes, “social stability was more desired than economic gain or general prosperity…” (pp. 60-61).

To cite another random example: The chapter on windmills in A History of Technology: From the Renaissance to the Industrial Revolution (1957) offers amazing details about innovations in a technology that was a crucial source of power to much of the economy throughout Europe.  There is no mention of any government influence or involvement.

Common sense dictates that the effects of government resources and pressures on technological innovation would be most evident in military technologies.  If the Pharaoh wanted his army to have faster chariots, or if England’s Henry V wanted more effective bows and arrows for his troops, one would think they could have made it happen.  But here, too, history offers mostly mysteries.

Evolution in Military Technologies

In the case of military technologies, the pressure to innovate and the rewards for innovation are consistently high.

Military history, however, offers repeated instances of inertia.  Thucydides’ Peloponnesian Wars, typically, describes about forty years of combat, and yet includes not one hint at technological innovation–even though one of the warring parties, Athens, was in its era of peak creativity.  Possible arenas for technological innovation by both Athens and Sparta (its rival), were vast and varied, including, not in order of importance, armor, spears, bows and arrows, stirrups, sailing ships, navigation, communication, construction, public hygiene, and food storage.

Such long periods of time with little change are neither unusual nor confined to ancient times; historian Alfred Crosby observes that “if one of King Edward’s gunners at Crecy in 1346 had been transferred to 1870 and service in the Franco-Prussian War, he would have felt at home.”   Five hundred years—half a millennium—would have elapsed. (Alfred W. Crosby, Throwing Fire: Projectile Technology Through History, Cambridge, UK: Cambridge University Press, 2002, p. 131.)

“A new device merely opens a door; it does not compel one to enter,” writes Lynn White in Medieval Technology and Social Change (1962). “The acceptance or rejection of an invention, or the extent to which its implications are realized if it is accepted, depends quite as much upon the condition of a society, and upon the imagination of its leaders, as upon the technological item itself.” (p. 28)

Evolution in Technology Compared to Biological Evolution: “Directionality”

Perhaps the most provocative –and useful–analysis of technology can be found in Robert Wright’s Nonzero: The Logic of Human Destiny (2000), which contends that the “basic tendencies in biological evolution and in the technological and social evolution of the human species” follow the same patterns, move in the same direction, and can be explained in the same terms.

Just as biological life has changed from simple, single-celled entities to complex organisms, Wright argues, human society has evolved from isolated hunter-gatherer tribes to today’s globalized civilization.  Here, he emphasizes a concept called “directionality,” the clear pattern that living and nonliving things move from the simple to the complex. (One advantage of “directionality” is it allows us to discuss change without making moral judgments.  Movement from simple to complex is not good or bad; it just is.  One worrisome disadvantage of directionality is that it may follow the general pattern in nature–that a system becomes increasingly organized and logical until it dissolves into chaos.)

“Directionality,” Robert Wright says, “is built into life.”

“Neither biological evolution nor human history is a smooth, steady process,” Wright says, “…both pass through thresholds; they can leap from one equilibrium to a new, higher-level equilibrium.”

And then he suggests that something special may be going on now: “To some people, the current era has the aura of a threshold; it has that unsettling, out-of-control feeling that can portend a major shift…We are indeed approaching a culmination of sorts; our species seems to face a kind of test toward which basic forces of history have been moving us for millennia.”

A “culmination of sorts” implies we live in special times, which may be true, or may be (as discussed above) a bias shared by virtually every generation of humans: the belief we live in a special time.

To the degree that there is evidence to study, every generation of virtually every culture seems to believe it lives in special times; and every era is, of course, special in its own way.

While the ultimate source of technological innovation remains a matter of scholarly debate, technologies clearly evolve.

Like their colleagues in the biological sciences, historians of technology are sometimes able to make only educated guesses why, when and how innovation occurs. For example: There are many reasons we use forks, but why do we use forks with four prongs all straight and the same length? There is no “right” explanation for why we do not use forks with one of the other shapes that emerged and enjoyed popularity over the centuries.  Henry Petroski’s The Evolution of Useful Things (1992) has photographs of dozens of forks whose designs seem eminently practical for daily use, but reached evolutionary dead ends and disappeared.

(One wonders how far the comparison between biological and technological evolutions can be taken. Biologists, for example, still only guess how zebras got their stripes–or whether a particular zebra is white with black stripes or black with white stripes.  Does the study of technology offer anything similar?)

We now leave biology for a while, but first make one more stop: “punctuated equilibrium.”

Punctuated Equilibrium (a continuation of the biology-technology connection)

To help explain innovations in living things, evolutionary biologists Stephen Jay Gould, Niles Eldredge and others have suggested the concept of “punctuated equilibrium”—organisms live generation after countless generation in a state of equilibrium without much change, interrupted by (more…)

Never-Ending Change and Becoming “Over-Developed”

As they incorporate concepts such as punctuated equilibrium into evolutionary theory, ecologists and other scientists have abandoned their belief in a “balance of nature” through which a natural system achieves an equilibrium in which change no longer occurs.

They now say that in nature, change is forever–no static end-point ever emerges (See, for example, Emma Marris, The Rambunctious Garden, 2012).  This is important–very important–because most analysts still argue that technological changes (and the economic growth it fuels) reach a “post-industrial” end-point after which major changes in society as we know it basically stop. There is, for example, as yet no word to describe what happens after a society industrializes and thus becomes “developed.”  A new phrase, “advanced society,” has started to float around, but no one seems sure of what it means.

Sure, we have talked for decades about “post-industrial” societies which, among other things, ship their toxic, polluting industries to “developing” countries”; but using this vague and limited language, what comes after “post-industrial”?  ”Over-developed”?  Phrases like “knowledge society” are similarly vague and misleading; e.g. medieval farmers could not survive without lots of knowledge about crops, when to plant, etc. In a way, they too were “knowledge workers.”

Even our science fiction seems to fail this “what comes next” challenge.  Whether Bladerunner or Star Trek, imagined future worlds always seem to be extensions of the current industrial world (there must be notable exceptions known to sci-fi aficionados).  The most compelling stories, based on the “machines will try to take over” or “machines and humans will blend together” themes, still build on a recognizable, contemporary industrial world. More on this later.  In the meantime, if you are interested, read about “singularity” and the writings of Raymond Kurzweil and Kevin Kelly.

Belief That Technologically-Driven Change Will Continue Forever…

Technological innovation and the economic growth it triggers have generated our assumption—so pervasive and strong we rarely bother to say it out loud—that change is constant.

As an indication of the degree to which we now take technologically-driven change for granted, consider how laughable the writings of Charles Perrault, who served in the court of French King Louis XIV, now seem. For example, in 1687 Perrault wrote:

Our age… is arrived the very summit of perfection. And since for some years the rate of progress has been much slower and appears almost insensible—as the days seem to cease when the summer solstice draws near—it is pleasant to think that there are probably not many things for which we need to envy future generations.

Perrault (author of Sleeping Beauty, Little Red Riding Hood, Blue Beard, Puss in Boots, Cinderella and many other fairy tale classics) was a man of great imagination; he was also at the center of power, enjoying regular contact with men and women who possessed Europe’s greatest minds.  And yet, he could not conceive of a future that might have things he would want.

Did Technology Change “Human Nature” (and is this change continuing)?

Is “human nature” a constant; e.g. have human beings always wanted possessions and then wanted more and more—and thus are there perpetual shortages? (Our belief that “human nature” exists dates back at least to the ancient Greeks). Or, is the desire for more and more somehow a product of technologies that drive modern capitalism?

Certainly, there is much to suggest that desire for comforts and conveniences, not to mention the accoutrements of wealth, have always been part of the human condition. David Hume, writing in 1752, describes what he sees as “the pleasures of luxury:”

If we consult history, we shall find, that, in most nations, foreign trade has preceded any refinement in home manufactures, and given birth to domestic luxury. The temptation is stronger to make use of foreign commodities, which are ready for use, and which are entirely new to us, than to make improvements on any domestic commodity, which always advance by slow degrees, and never affect us by their novelty.

The profit is also very great, in exporting what is superfluous at home, and what bears no price, to foreign nations, whose soil or climate is not favourable to that commodity. Thus men become acquainted with the pleasures of luxury and the profits of commerce; and their delicacy and industry, being once awakened, carry them on to farther improvements, in every branch of domestic as well as foreign trade. And this perhaps is the chief advantage which arises from a commerce with strangers.

It rouses men from their indolence; and presenting the gayer and more opulent part of the nation with objects of luxury, which they never before dreamed of, raises in them a desire of a more splendid way of life than what their ancestors enjoyed. And at the same time, the few merchants, who possess the secret of this importation and exportation, make great profits; and becoming rivals in wealth to the ancient nobility, tempt other adventurers to become their rivals in commerce.

Imitation soon diffuses all those arts; while domestic manufacturers emulate the foreign in their improvements, and work up every home commodity to the utmost perfection of which it is susceptible. Their own steel and iron, in such laborious hands, become equal to the gold and rubies of the Indies. (Essays: Moral, Political and Literary (1752 [under the title of Political Discourses] part II, Essay I “Of Commerce.” [paragraph breaks added])

Likewise, the writings of Mercier de la Riviere, which influenced both Adam Smith and Thomas Jefferson, teach that “The greatest happiness possible for us consists in the greatest possible abundance of objects suitable to our enjoyment and in the greatest liberty to profit by them” (1767, quoted in John Bury, The Idea of Progress, 1921, p. 173). (Mercier de la Riviere was a pre-French revolutionary economist who believed that a nation’s entire wealth came  from its agriculture; that his ideas on property and happiness still have a strong hold on us today demonstrates how people can exert great influence even when time proves them wrong on many big things.)

But now add technologies–and the advertising they make possible–to the equation.

Technology Changes Human Nature, continued

Thanks to technology, we are growing richer and feeling poorer.

“Man is a perpetually wanting animal,” psychologist Abraham Maslow noted way back in 1943. Humans, he says, naturally and readily arrange their needs in “hierarchies,” and “the appearance of one need usually rests on the prior satisfaction of another…” (“A Theory of Human Motivation,” Psychological Review, 50, 370-396).

Human beings, Maslow argues, thus offer advertisers unending opportunities to create, expand, and manipulate perceived needs:

But what happens to man’s desires when there is plenty of bread and when his belly is chronically filled? …the whole philosophy of the future tends also to change… At once other (and ‘higher’) needs emerge and these, rather than physiological hungers, dominate the organism. And when these in turn are satisfied, again new (and still ‘higher’) needs emerge and so on.

Such “higher” needs, Maslow continues, are nothing less than “endless”:

All people in our society (with a few pathological exceptions) have a need or desire for a stable, firmly based, (usually) high evaluation of themselves, for self-respect, or self-esteem, and for the esteem of others.

We will see in future discussions—as we see every day in the world around us right now—how advertisers have nurtured endless needs within children, transforming younger and younger people into what are often called “consumer trainees.”

But for the moment, having seen that the technologies (which triggered economic growth) at the same time change human nature, fueling our unending desire for more goods and services to consume, we move on to a major countervailing force: technological inertia.

The Dominant Force is Often Technological Inertia–to stay with old technologies because they are established and familiar

“Technological inertia” can be a difficult notion to grasp, especially since so much change seems to be occurring so quickly.  After all, in 1995, few people had anything like a cellphone; now virtually everyone has one.  And as recently as the mid-1990s, few people had heard of the “Internet.”

But let’s let author technological historian Edward Tenner describe the phenomenon he describes as “the shock of the old” and “the intransigence of reality” (“A Place for Hype,” London Review of Books, May 10, 2007; some of his sentences have been placed in a different order):

The B-52 was introduced in 1952 and no more were built after 1962, yet [it] is expected to remain in service until 2040…

The most significant recent breakthrough in the technology of power transmission, the discovery of high-temperature superconductivity in 1986, seemed to herald virtually resistance-free electric cables, but is still far from being a large-scale application… John von Neumann, the US’s most brilliant scientific-political adviser of the postwar decades, wrote in Fortune Magazine in 1955 that once nuclear power generation had overcome the design limits of older hydrocarbon plants, ‘energy may be free – just like the unmetered air – with coal and oil used mainly as raw materials for organic chemical synthesis.’ Von Neumann was already aware of the likelihood of global warming from burning hydrocarbons, but saw it not as a cause for worry so much as a possible means for humans to control the climate: we would soon be able to warm or cool the world, or parts of it, mitigate storms and control rainfall. He didn’t seem to doubt this would happen…

Why are older technologies still so prevalent? Or to put it another way: why have so many promising ideas produced less than we expected, at least so far?

One ‘miracle’ after another has turned into a mirage. The future is running behind schedule. Just as the use of horses persisted well into the 20th century [the German Army during World War II used far more horses than it did mechanized vehicles], so piston-driven internal combustion engines, developed in the 1870s and 1880s by Otto and Benz, continue to dominate passenger transport. The limited range of all-electric cars has (so far) doomed them commercially. Indeed, poor battery life continues to bedevil devices from cars to digital music players… The trains that carry commuters in Europe and the U.S. run on rails similar to those of the 1890s, while diesel trains use an air brake system patented in 1872. Magnetic levitation trains were in service as early as 1984 in Birmingham, yet are still largely at the demonstration stage… An airline flight from Philadelphia to Los Angeles now takes nearly an hour longer than it did forty years ago.

Why is it important to know this?  Because, as Tenner emphasizes, we live amid “the rhetoric of technological revolution” and must keep our expectations and goals in tune with reality.  To do otherwise can be dangerous; e.g. inflated expectations about the timetable to renewable sources of power may impede or even kill serious efforts to capture carbon from the burning of fossil fuels.

At the same time, we must remember that reality always offers some combination of technological inertia and rapid change.

Two New Ideas Emerge

Sometime in the early-to-mid 1700s, two ideas emerged. No one knows exactly (or even inexactly) when, where, how, or why.  We can, of course, guess.  Within England’s emerging–and rapidly growing–commercial, middle-class?  Among French and other philosophers who gave us what we now call the “Enlightenment”?

In any event, these two ideas have become so pervasive and so fundamental to our ways of thinking and looking at the world, we often no longer even see them or think about them.  They have become like the air around us.  Day by day, moment by moment, they continue to silently shape our actions and expectations.

One of these ideas is “progress”–belief that in the natural course of time, things (our lives, society, the condition of humanity, etc.) are on a general upward trajectory, getting better and better.  We will leave this idea for now and return to it soon.

The second idea burst forth from Adam Smith’s Wealth of Nations (1776): win-win economic competition, the concept that you and I can compete in the marketplace and both become wealthier.

The Power of Ideas

Ideas can have extraordinary power.

Political and social turmoil engulfed France in the mid-1800s as the country, in quick succession, embraced democracy, monarchy, and then military rule. Forced into exile on a British-controlled island just off the coast of the land he loved, French novelist Victor Hugo kept faith that democracy would prevail. “Greater than mighty armies,” he wrote, “is an idea whose hour has come.”
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“Win-Win” Economic Competition

The idea behind economic growth is that the economy can function as a non-zero sum game—that instead of winners and losers, economic competition can produce only winners. This idea first appears in print–and runs implicitly and explicitly through–Adam Smith’s Wealth of Nations.

Published in 1776, shortly after what we know as economic growth began, Wealth analyzes how what Smith calls “the natural progress of opulence” can lead to the “continued increase” of wealth. An economy of winners and winners.

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Win-Win as Revolutionary Concept

Win-win economic competition makes sense when we think about it now, but it is revolutionary.
In Great Books of the Western World, a collection of fiction and nonfiction writing compiled by the University of Chicago in 1952, only two of the 102 writers whose works are selected as “great” address what the editors describe as “the means to wealth”—how individuals and societies increase their wealth: Adam Smith’s Wealth of Nations (1776) and Karl Marx’s Capital, published in 1848.

From the classic Greeks and Romans through more than 2,000 years of philosophers, poets, historians and others who comment on what seems like every aspect of human life, no one else conceived of anything even remotely resembling the economic growth virtually all societies now accept as a primary and essential goal.

Marx focused on individual well-being as opposed to overall societal wealth, while his colleague and frequent collaborator Friedrich Engels emphasized what we now call economic growth; Engels also anticipated the process through which technology would generate new needs (much more on this soon).

Events in the past century have discredited the writings of Marx and actions based upon them, leaving Adam Smith alone as the thinker who attempts to describe a world in which the growing wealth of one person does not mean another becomes poorer.

In a separate volume, the Great Books editors identify and analyze more than 1,100 basic ideas found in the volumes they publish.  Describing “wealth,” they say that the great authors focus on:

…wealth as a factor in the lives of men [people] and societies. They scrutinize the desire for wealth or the love of money in relation to sin or virtue. They raise questions of justice concerning the distribution of wealth, the rights of property, and fairness in exchange — in buying and selling, borrowing and lending, and in compensating the laborer. They describe the effect of poverty and prosperity or opulence on states, and prescribe the attitude that individual men as well as societies should take toward wealth and poverty.

Plutus, the Roman god of wealth, for example, bestows his graces on a select, and usually isolated few; hence, the word “plutocrat.” And “El Dorado,” a concept from the 16th century, is a place in which massive wealth can be instantly acquired—again, as in all myths about quests—by a select, elite few.

These writings certainly laud the desirability of wealth. As the Book of Job begins, for example, he has “seven thousand sheep and three thousand camels and five hundred yoke of oxen and give hundred she-asses and a very large number of slaves;” and then, after enduring tribulations and keeping faith in God, he is rewarded by, among other things, having his possessions doubled.

But nothing in the Great Books seems to describe a society in which overall wealth increases. To the contrary, the books express concern about too much wealth. For example, Plato’s The Republic, written at about 360 BCE, says producing too much wealth results in a “luxurious State” which destroys itself:

… a State at fever heat… many will not be satisfied with the simpler way of life.  They will be for adding sofas, and tables, and other furniture; also dainties, and perfumes, and incense, and courtesans, and cakes, all these not of one sort only, but in every variety; we must go beyond the necessaries… Now will the city have to fill and swell with a multitude of callings which are not required by any natural want… and gold and ivory and all sorts of materials must be procured…

Then we must enlarge our borders; for the original healthy State is no longer sufficient. Now will the city have to fill and swell with a multitude of callings which are not required by any natural want; such as the whole tribe of hunters and actors, of whom one large class have to do with forms and colours; another will be the votaries of music—poets and their attendant train of rhapsodists, players, dancers, contractors; also makers of divers kinds of articles, including women’s dresses.

And we shall want more servants. Will not tutors be also in request, and nurses wet and dry, tirewomen and barbers, as well as confectioners and cooks; and swineherds, too, who were not needed and therefore had no place in the former edition of our State, but are needed now.

The ultimate and inevitable result, Plato says, is war, unhappiness and destruction for the city whose only “sin” was to increase its overall wealth.

Adam Smith–Misunderstood and Mysterious

 

Adam Smith, despite the considerable attention he attracts from today’s scholars and political leaders, remains curiously misunderstood and mysterious.

His field was not what we now call “economics;” he was mostly a moral philosopher concerned about what mankind would do as it moved beyond simply having to meet its basic physical needs.  He wrote few letters and burned his personal papers before he died (in 1790).  And to make analyzing his life and his thinking even more difficult, Smith’s notes from decades of delivering lectures at universities in Glasgow and Edinburgh are lost; all we have now are notes taken by some of his students.

Among the surprises (at least for today’s readers) in Wealth of Nations are long-ignored observations about war applicable to the way the U.S. fights–and finances–war today.  Noting how the British government had fought the long and costly French and Indian War (as we call it; in Great Britain, it is the Seven Years’ War) by going deeper and deeper into debt, Smith wrote:

…people who live in the capital, and in the provinces remote from the scene of the action, feel, many of them, scarce any inconveniency from the war; but enjoy it at their ease, the amusement of reading in the newspapers the exploits of their own fleets and armies. To them this amusement compensates the small difference they pay on account of the war…

What most people discuss about Smith now often seems carefully selected to meet their own needs; Smith, for example, condemned corporations, a fact that today’s commentators only rarely mention.

Nor did Smith oppose strong government action.  Despite his fame as author of the notion that an “invisible hand” guides a free economy, The Wealth of Nations contains detailed descriptions of how a wide range of significant government actions—including regulation of trade and setting quality standards for goods—can increase a country’s wealth.

Indeed, Smith used “invisible hand” only once, in passing, and then to mean something very different from what most people assume it means today.

The “Invisible Hand”

In popular parlance, “invisible hand” has come to mean the unimpeded workings of the market—the implicit and explicit assumption that if we simply let the market work its wonders we will all benefit and the public interest will be served.

In actuality, the “invisible hand” only appears once in The Wealth of Nations, and Smith uses it to discuss (more…)

Economic Growth Led to Democracy

Let’s pause for a moment and see where we are.

We have seen that what we now call economic growth (more…)

We Can See a Prosperity-Democracy Relationship in Ancient Greece

Certainly the Founders would have known that prosperity and economic stability are conducive to liberty.

But, this is the entire entry on “democracy” they would have read in the 1778 Encyclopedia Britannica. Note that democracy–”supreme power lodged in the hands of the people”–was not considered to be particularly new or desirable:

DEMOCRACY, from δῆμος, people, and κράτος, to command or govern; the same with a popular government, wherein the supreme power is lodged in the hands of the people: such were Rome and Athens of old; but as to our modern republics, Basil only excepted, their government comes nearer to aristocracy than democracy.

Importantly, however, even in ancient Greece, whether or not people realized it at the time, economic growth seems to have been associated with democracy. Classicist Josiah Ober writes:

Most premodern states, like too many countries today, were dominated by a small elite of ultra-privileged insiders who monopolized public goods, skimming off whatever surplus was produced by populations living near bare subsistence and thus seizing super size shares of stagnant economies.

By contrast, the Greek world in the 500 years from Homer to Aristotle saw sustained economic growth and historically low level of economic inequality. Recent studies suggest that, from 800 B.C. to 300 B.C., the population of the Greek city-states increased by a factor of 10, while per capita incomes roughly doubled. That growth rate may be sluggish compared to leading 21st- century economies, but it is amazing by the standards of premodernity.

What can explain such economic growth? Free Greeks (we must never forget that this was a slave society) invested their efforts in industry, commerce and politics because they did not fear that the fruits of their effort would be expropriated by the powerful. Further, though the roughly 1,000 city-states of classical Greece competed fiercely in war, they actively exchanged goods and ideas. Among the productive innovations that spread rapidly across the Greek world were coinage, codes of law, and deliberative councils. There was no imperial center but instead a historically distinctive approach to politics. (“Handing Out Knives to Madmen,” Wall Street Journal, February 19, 2011)

(Ober’s major scholarly work on the subject, Democracy and Knowledge: Innovation and Learning in Classical Athens simply asserts a correlation between democracy and prosperity. When discussing oligarchic coups in Athens of the late 5th century BCE–near the end of the Peloponnesian wars–for example, Ober writes that “in each case, democracy was quickly restored, and the city returned to prosperity, security, and influence.”  In light of our discussion of technological innovation above, it is interesting that Ober never mentions technology.)

Coincidence? At the time of the American Revolution, the Colonies were Wealthier Per Capita than their Mother Country

We can, moreover, see the American Revolution itself as further proof of a relationship between increases in a country’s wealth and the demands of its people for democracy. (more…)

As It Was Occurring, No One Spoke About an “Industrial Revolution”

When the “Industrial Revolution” (and economic growth) began and for a century or more afterwards (depending on what rough “start” date you use), few people realized what was happening.

(more…)

Change, but with an End-Point

From what we can tell, Adam Smith expected society to reach what he called a “Stationary State” when major change would no longer occur. (more…)

Likewise, Our Founders Failed to Understand What They Saw; e.g. Thomas Jefferson & Steam Power

The men now called our Founding Fathers looked for–and took note of–many key technological innovations, but had no idea what they were seeing. Here, for example, is Thomas Jefferson writing to his friend Charles Thomson from London on April 22, 1786 (paragraph breaks added to increase accessibility for today’s readers):

In one of your former letters, you expressed a wish to have one of the newly invented lamps. I find them made here much better than at Paris, and take the liberty of asking your acceptance of one, which will accompany this letter. It is now found, that any tolerable oil may be used in them. The spermaceti oil is best, of the cheap kinds.

I could write you volumes on the improvements which I find made, and making here, in the arts. One deserves particular notice, because it is simple, great, and likely to have extensive consequences. It is the application of steam, as an agent for working gristmills. I have visited the one lately made here. It was at that time turning eight pair of stones. It consumes one hundred bushels of coal a day. It is proposed to put up thirty pair of stones. I do not know whether the quantity of fuel is to be increased.

I hear you are applying the same agent in America to navigate boats, and I have little doubt, but that it will be applied generally to machines, so as to supersede the use of water ponds, and of course to lay open all the streams for navigation.

We know, that steam is one of the most powerful engines we can employ; and in America fuel is abundant. I find no new publication here worth sending to you. I shall set out for Paris within three or four days.

Jefferson’s attitudes and actions demonstrate the degree to which individuals’ mental framework (and expectation) can shape what they see.  He cared intensely about innovations in agriculture and industry, and knew the manufacturing sector of the economy would grow.  But Jefferson thought the Louisiana Purchase would take care of Americans “for a thousand generations” by offering vacant land to those abused this by manufacturing (Joyce Appleby, Capitalism and a New Social Order: The Republican Vision of the 1790s. N.Y.: N.Y. University Press, 1984).  Jefferson and his followers expected, historian Joyce Appleby notes, “a sustained prosperity based [not on technological advances but] upon an ever-expanding global exchange of goods…” (p. 92).

Jefferson died in 1826, but never seemed to understand what was happening.

The “Age of Machinery” and a Widening Gap Between Rich and Poor

People, of course, did recognize that machines were playing a larger and larger role in their lives.

British historian Thomas Carlyle’s Signs of the Times, published in 1829, uses “Age of Machinery” and “Mechanical Age,” phrases that could have become popular and timeless, but which few people at the time seem to have noticed and no one now remembers. Many of his descriptions, however, were accurate and timeless:

On every hand, the living artisan is driven from his workshop, to make room for a speedier, inanimate one. The shuttle drops from the fingers of the weaver, and falls into iron fingers that ply it faster. The sailor furls his sail, and lays down his oar; and bids a strong, unwearied servant, on vaporous wings, bear him through the waters. Men have crossed oceans by steam…

There is no end to machinery. Even the horse is stripped of his harness, and finds a fleet fire-horse invoked in his stead. Nay, we have an artist that hatches chickens by steam; the very brood-hen is to be superseded! For all earthly, and for some unearthly purposes, we have machines and mechanic furtherances; for mincing our cabbages; for casting us into magnetic sleep. We remove mountains, and make seas our smooth highways; nothing can resist us. We war with rude Nature; and, by our resistless engines, come off always victorious, and loaded with spoils.

 … how much better fed, clothed, lodged and, in all outward respects, accommodated men now are… how wealth has more and more increased, and at the same time gathered itself more and more into masses, strangely altering the old relations, and increasing the distance between the rich and the poor, will be a question for Political Economists, and a much more complex and important one than any they have yet engaged with.

The “distance between rich and poor,” Carlyle warned, would soon become a major problem.

[To put Carlyle (1795-1881) in context: his writings also attacked democracy (he wanted rule by aristocrats) and exuded far more than the normal racism for his time (he wanted America’s South to win our Civil War).]

Did Charles Dickens Understand the Fog?

Most observers, perhaps not surprisingly, saw the rise of industry as something that just slowly happened, as opposed to a dramatic break with the past. London’s fresh air, for example, gave way to the intense and deadly fogs caused by burning coal. In Bleak House, (1854-54) novelist Charles Dickens noted the city’s fog as though it was a natural phenomenon:

Fog everywhere. Fog up the river, where it flows among green aits and meadows; fog down the river, where it rolls deified among the tiers of shipping and the waterside pollutions of a great (and dirty) city. Fog on the Essex marshes, fog on the Kentish heights. Fog creeping into the cabooses of collier-brigs; fog lying out on the yards and hovering in the rigging of great ships; fog drooping on the gunwales of barges and small boats. Fog in the eyes and throats of ancient Greenwich pensioners, wheezing by the firesides of their wards; fog in the stem and bowl of the afternoon pipe of the wrathful skipper, down in his close cabin; fog cruelly pinching the toes and fingers of his shivering little ‘prentice boy on deck. Chance people on the bridges peeping over the parapets into a nether sky of fog, with fog all round them, as if they were up in a balloon and hanging in the misty clouds.

Gas looming through the fog in divers places in the streets, much as the sun may, from the spongey fields, be seen to loom by husbandman and ploughboy. Most of the shops lighted two hours before their time–as the gas seems to know, for it has a haggard and unwilling look.

The raw afternoon is rawest, and the dense fog is densest, and the muddy streets are muddiest near that leaden-headed old obstruction, appropriate ornament for the threshold of a leaden-headed old corporation, Temple Bar. And hard by Temple Bar, in Lincoln’s Inn Hall, at the very heart of the fog, sits the Lord High Chancellor in his High Court of Chancery.

Never can there come fog too thick, never can there come mud and mire too deep, to assort with the groping and floundering condition which this High Court of Chancery, most pestilent of hoary sinners, holds this day in the sight of heaven and earth.

First Use of the Expression “Industrial Revolution”

Historians have found the first written instance of “industrial revolution” in 1799, but this phrase did not become commonplace until after Arnold Toynbee delivered his Lectures on the Industrial Revolution in 1884.

In these Lectures, Toynbee explains that he wants to “investigate the stages of economic development” and the source of “material progress.” Rather than accept what he called “the conception of slow development, according to definite laws,” Toynbee says that the suffering and injustice which accompanied industrialization were not “inevitable” or the product of “natural laws,” but were “just as often…brought about by the self-seeking action of dominant classes.”

Toynbee attributes what we now call growth to “altered conditions in the production of wealth,” and said that “free Trade” is chief cause of increased “aggregate wealth.”

To the logical question, “Will our wealth continue to increase and our trade to expand?” Toynbee writes that an answer is “impossible.”

He also admits he has no idea whether industrialization had reached its worldwide peak in the early 1880s, and did not try to guess.  This is part of a 19th century persistent–and all-important–question that gained increasing attention throughout the 20th century and continues in the 21st:  Does what we call “industry” have a natural end point (or limit), and, if so, what comes next?

If Few People Noticed Something as Big as Industrialism, What Are We Missing Today?

The question is far from rhetorical.

History teaches that people living through major changes in their society may not–or perhaps, are not able to–notice the changes occurring all around them. (more…)

Economic Ideas at the Time of the American Revolution

The Founders did not seem to even imagine that what we now call economic growth would occur. Indeed, the words “economy” and “growth” did not exist.

Many of them had, of course, read The Wealth of Nations, which described the opportunity to work hard to become wealthy as nothing less than a “sacred” human right:

(more…)

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