The Great Machine VI: The Best Lack All Conviction

Because it was There

The success of statist/hierarchical capitalism over all other models is due to its effectiveness at defeating problems of scale in a low-bandwidth, low-tech civilisation. It is, if you want to look at it from the opposite end of the process, the most effective way of inventing the internet as quickly as possible. The ability to support, use and above all disseminate technological advances at a large scale in a low-bandwidth environment is why this model of organisation has always won. And it has now created the answer to its own success. Let’s look back at why Britain got the industrial revolution first.

A combination of factors including but not limited to the Norman Conquest and subsequent rationalisation of our memory-based law system into one based on writing; immensely plentiful and remarkably balanced mix of naturally occuring raw materials; their geographical proximity on a surprisingly small island which could also farm enough to support an unexpectedly large population; and the four great rivers. That last is utterly crucial, because it allowed us to move resources from rural primary industry to urban secondary industry more effectively, and faster, than any competitor around.

It’s all about communication infrastructures. And now, the Western World as a whole is rapidly turning into a single, light-speed communications infrastructure. The ability to get the word out; to link up demand with supply without gatekeepers, to circumvent the anti-competitive grip of vast conglomerates by direct communication from producer to purchaser; the ability to organise dissent against foolish governments, the ability to counter government- and plutocrat-sponsored propaganda in the mainstream media: all of these things are out of CERN’s box and at large in our society. As the Climate Camp have proved, it is now possible to organise on a consensus basis and still effectively mobilise thousands people from the whole of Britain, all at once for a single co-ordinated action in a single place. In about a month. This has been quite literally impossible for any civilisation before now.

So the unique selling point of hierarchical market capitalism is gone. Other models which have been tried before failed because they could not scale in a low-bandwidth environment, but we’re in a high-bandwidth world now. That means that virtually everything we’ve tried and a whole lot of things we haven’t can be taken out and given a good going-over to see if they’ll work, once modified for the modern world.

Iceland operated a semi-consensus, semi-democratic social organisation, without central leadership, for over a century from 950 onwards. They had arbitrarily evolved a communications infrastructure (horses and really good boats) balanced with a scale of operations (a fairly small island with quite a small, regionally concentrated population) which permitted them to do so. Once they got into direct competition with a larger-scale economy though (Denmark) they lost because they couldn’t scale. Roll forward to 1688 and the information infrastructure is good enough for the British to put actual governance in the hands of geographically-elected representatives across the whole island, who all meet centrally. A bit further on and we see the USA develop a successful federalist state with distributed local government controlled in a strict plutocratic hierarchy. And it just keeps on going.

Humans have, in almost every sphere of endeavour, climbed their mountains just because they were there. Yet for some reason we are disinclined to re-assess our institutions in the same spirit. “Because it’s already there” becomes the last refuge of conservatism; the past for the past’s sake. Even though the West is clearly failing in their own ‘free-market’ competition against the developing economies, no-one who matters is talking seriously about post-industrialism and its effect on social politics or economic planning or education architectures.

Hierarchies create order and protect the people ruling the hierarchy. They concentrate power, usually in the modern era expressed as capital accumulations, towards the centre of the network. But the rules have changed now. The reasons hierarchies win in competition have been removed: other options could now work which in the past just couldn’t scale. Yet we do not try them: why not?

Because those to whom the Great Machine funnels money and power are full of passionate intensity. Also they own most of the media, the governments, the multi-national conglomerates and the schools. Those who want to build a future rather than touching up the paint on a crumbling past, lack all conviction. No other system has ever worked; but that is no reason to believe they can’t work now.

Slouching Towards Bethlehem

Not only do we now have access to all of those old ideas, re-examined and if necessary hacked up for spare parts in new ideas for the future; we also have access to a higher mindshare as a percentage of our species than ever before. Communication drives innovation much more directly than capital does. The lower the cost of entry to your information bazaar, the faster your society moves. The past is no longer an adequate ambition for a species which could kill itself by accident.

Like Sparky in the earlier years of underclass solidarity, we have access to the basic truth that when less than 5% sit at the centre of the Great Machine, the other 95% of you can exert more pressure than they can sustain. The centre cannot hold against the edge if the edge can get organised. We can now operate direct person-to-person networks for information and trade which step around the assumptions of the past. We can do this fast enough and effectively enough to re-write the rules of societal economics, as a Finnish student did by choosing to release his operating system for others to use, for free.

As a species we have grown out of the age of machines, but our attitudes were born in it and cling to its blinkers. Globalisation is going to happen; nothing one can do to stop that now. But we do have an opportunity not seen since the start of the Common Era to redefine the nature of the next great leap for humankind.

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17 Comments

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17 responses to “The Great Machine VI: The Best Lack All Conviction

  1. Mark

    So, improvements in communications technology allow people across a broader geographical area the chance to contribute and work together on political issues.

    Yeah, fair enough.

    Unfortunately, this;

    “Even though the West is clearly failing in their own ‘free-market’ competition against the developing economies”

    is just nonsense. I thought I`d already schooled you on this in the previous thread. In what respect are these claims clear?

    • johnqpublican

      No; you tried. You failed, due to a) not understanding macro-economics, b) not understanding the relevance of growing protectionism in the West, and c) having no evidence to present to the contrary. You never answered any of the points I made, in some detail; you just kept going round in tired circles, which is why I’ve lost patience with you. An example would be your repeated, and unsupported, assertion that privately held capital is intrinsically different from publicly held capital. Functionally they are identical. You keep claiming they aren’t.

      If the West was winning the manufacturing trade war, then Western nations would be over-producing relative to their internal consumption of manufactured goods, and exporting the surplus to China, India, and so on. The West would be net exporters of manufactured goods. Are they? No, they are not.

      Quod erat demonstrandum, if massively simplified for the hard-of-thinking.

      • Mark

        It`s quite true that my knowledge of economics is fairly rudimentary. So…

        “An international economics course should drive home to students the point that international trade is not about competition, it is about mutually beneficial exchange. Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import what it wants. Exports are not an objective in and of themselves: the need to export is a burden that the country must bear because its import suppliers are crass enough to demand payment.”

        Who said that?
        Hint: He recently won the “nobel prize” in economics…
        So, since we`re into quotations and evidence these days, can you explain, with reference to at least one nobel laureate why you`re not talking utter pap?
        Growing protectionism in the West would be a direct result of ignorance regarding international trade and/or the influence of certain special interest groups (owners of clothing factories for example) – it`s not actually got anything to do with losing the “trade war”.
        My point is that we don`t actually want to produce things, we want to consume them. So far, you`ve utterly failed to address *that* and I suspect that if you were in anyway knowledgeable with respect to this subject, you would have, long ago.

        I`m not too sure what you mean by privately held capital being identical to publicly held capital – but if you mean that resources owned and managed by an individual are identical to resources owned and managed collectively, then there is a fairly major difference – namely that each owner/manager of publicly held resources has less insentive to manage them carefully than they do their privately owned resources. My reference for this, as always, is my bog-standard undergraduate economics text and of course logical thinking.

        • johnqpublican

          Growing protectionism in the West would be a direct result of ignorance regarding international trade and/or the influence of certain special interest groups (owners of clothing factories for example) – it`s not actually got anything to do with losing the “trade war”.
          My point is that we don`t actually want to produce things, we want to consume them. So far, you`ve utterly failed to address *that* and I suspect that if you were in anyway knowledgeable with respect to this subject, you would have, long ago.

          This, this I can engage with. Thank you. I’m going to return to the ‘special interests’ point below. The point that “we don’t actually want to produce things, we want to consume them” is absolutely relevant. No-one wants to work for a living. What people want is to inherit so much wealth from daddy that they never have to work but can buy anything they fancy. Would you agree with that? It’s merely a paraphrase of your own point.

          I have spent a considerable amount of time laying out the origins of pre-monetary wealth accumulations. I wouldn’t have bothered if they weren’t relevant. Your Krugman quote is contexutalised by a pre-existing network of monetarised, mercantile trade. It’s also basic common sense. Imports, i.e. consumption, are crucially important. The more you can consume, the more power you have. And I dealt with that in GM I.

          What I was talking about production. Industrial status is defined by what you produce, not by what you consume. Look at Britain in the early phase of industrialisation; look at the import/export balance under Charles II, or better under Elizabeth I. Then look at what happened in the early 1850s; then look at what happened after the 1930s.

          When a nation is pre-industrial, its import/export balance tends to be, well, balanced. Britain’s started to get tilted towards export after we became textile producers to most of Europe and invented the assembly line to be able to keep up with demand. It’s also at this point that we became anything other than the junior cousin of the Great Powers.

          As a nation goes up the industrial curve, they start over-producing relative to their internal consumption and begin to export manufactured goods rather than raw materials. British wool had been a major export since William the Bastard: mostly to the dying industry of Moorish Spain, who then exported the manufactured goods. It only started to tilt the figures when it was British cloth and clothing that was being exported. The phrase ‘Lincoln Green’ entering common European parlance is a good example of this phenomenon.

          When a nation reaches the industrial plateau (for Britain that would be the period between 1850 and 1929) this starts to level out. There are several arguments as to why; the one I find most plausible is that it’s the Trickle-Down effect. Initially, only the people at the centre of the Great Machine can afford imported goods; once industrialisation and the Enlightenment created a functioning middle class, a much higher percentage of the country became able to afford to import.

          Then what happens next? Nations become net importers of goods. That’s great, provided you’re still creating more wealth than you spend; we aren’t, because too much of our population is engaged in jobs which do not produce anything. Tertiary industry, in other words. I.e. if you have been industrial and you stop making things, eventually your economy runs out of money. That’s what’s happening now, though it would have happened earlier if someone clever hadn’t invented an entirely new market. I covered all of this before.

          One reason I have not been going back to all the quotations (the other is that I am over a decade out of uni and my History 101 text-books are in a box in Cheltenham) is that none of the knowledge I have referenced is controversial. Several of the conclusions are; I’ve been carefully marking those out by italicising them. But no-one claims that Britain is still an industrial economy; our largest export is money, as is our largest import (though both of these may no longer be true) and over 60% of our population works in tertiary industry. To be an industrial economy at least 60% of your population must be working in the primary and secondary industrial sectors. We just happen to be the first people who got past the industrial plateau: we’ve only dropped into post-industrialism since Thatcher.

          Also, I feel I should apologise for a cheap shot. You clearly do understand economics; for that allegation I’m genuinely sorry. If I may rephrase my critique: you seem to have a good understanding of monetarised, post-Imperial economics. Friedman, Keynes and company. I am not an economist: I’m an historian, with a bent towards historiography and socio-economic systems analysis. What frustrates me in debating with you is that you have a box (industrial, post-Enlightenment concept definitions) and any analysis which is derived from outside that (such as a functional discussion of economic evolution since the early Bronze Age) you simply ignore when it disagrees with your pre-existing view. My analysis is, and always will be, informed by as much of history as I can relate to the thesis; as far as I can tell, my main point hasn’t got through at all, occluded by the fact that I’m working with broader and more functionally-defined concepts than you are prepared to accept. In the simplest terms I can use, my points relevant to this sub-thread are these:

          1. When communications are hard, hierarchies are extremely effective organisational schema.
          2. The more you elevate the education and prosperity level of your population, the higher their expectations of equal access to wealth will be.
          3. The process of capital accumulation has been around a lot longer than money (more on this below), and capital acts on economics like gravity acts on spacetime: money flows towards pre-existing capital accumulations, on a systemic basis.

          Would you say any of those are wrong?

          I`m not too sure what you mean by privately held capital being identical to publicly held capital – but if you mean that resources owned and managed by an individual are identical to resources owned and managed collectively, then there is a fairly major difference

          Capital can be defined ideologically (e.g. Marx): it can also be defined functionally (which is what John Stewart Mill was trying for). I’ve been using a functional definition; we’ve already argued around the houses about that, but my working and reasoning are published here and anyone who wants to understand me can easily do so.

          Given that we are talking about capital as defined functionally, but from a perspective of having a lot more data than JSM had, then to compare private and public capital accumulations we have to look at the functions of them. How do they affect the market?

          If a state has a lot of money, then it can employ that money to a) make more money, and b) make people do what the state wants. If a private individual has as much money as a state (see Bill Gates and the Sultan of Brunei on this subject) then they can: employ that to make more money, and employ that to make people do what they want done. Private and public capital accumulations affect the market identically. Screwing up administering the one is just as fatal as screwing up administering the other. Drawing a distinction between the two can only be a value judgment; not a functional one. As was noted by Patrick, I have been assiduously avoiding those in this series, because I’m not for the moment arguing theory or ethics or governance models or politics. I’m analysing what happened, in practice, all over the world to get us to a place where statist market capitalism is not only the dominant system, but overwhelmingly the best performing one.

          Your point is about efficiency of administration: it’s not hard to argue. Stalin is really the only example one needs though Louis XVII provides another. My point is about the functions of capital accumulation. Entities which have a huge pile of cash affect the market in certain ways, one of which is a constant inflow of more money from the edge to the centre. This does not change if the entity happens to be a government: the significant functional element is that they are a unitary administering authority.With UK PLC, that’s represented by a hierarchical administration structure with the Chancellor at the top.

          I make no comments as to whether this is good or bad; it’s just the way it is.

          • Mark

            Sorry, I’m going to go through your post in a backwards fashion.
            “To be an industrial economy at least 60% of your population must be working in the primary and secondary industrial sectors. We just happen to be the first people who got past the industrial plateau: we’ve only dropped into post-industrialism since Thatcher”
            By this definition, (if this is the only condition) neither Japan, Germany or the US are industrial nations, while Ethiopia and Sudan are. China is just about an industrial nation but *in fact*, the major difference between the economies of China, Japan and Germany with regards to employment by sector is not that China has more people employed in the industrial sector, but that it has far more engaged in agriculture. According to wikipedia the percentage of the workforce engaged in the industrial sector for each country are; UK 18%, Ger 33%, China 25%, Jap. 27.8% Ethiopia 9.9%. I’ve got a feeling that what your above definition will indicate is *not* the level of industrial production within a country (or even how far the secondary sector is an important employer), but the extent to which the country is still mired in rural poverty – in which case, it is useful to label this an “industrial economy”?
            “That’s great, provided you’re still creating more wealth than you spend; we aren’t, because too much of our population is engaged in jobs which do not produce anything. Tertiary industry, in other words. I.e. if you have been industrial and you stop making things, eventually your economy runs out of money….. . But no-one claims that Britain is still an industrial economy; our largest export is money, as is our largest import (though both of these may no longer be true) and over 60% of our population works in tertiary industry.”
            Britain is actually ranked as the fifth or sixth largest industrial producer in the world (after the US, China, Japan, Germany and maybe Brazil [derived from CIA fact book]). But really, that’s beside the point since there is absolutely no reason that the provision of services in return for goods should be unsustainable – anymore than the exchange of manufactured goods for agricultural produce is. Let’s take the example of Hong Kong. By far, the largest sector of the economy in Hong Kong is services (and before that manufacturing) but this doesn’t mean that the people starve – they receive food and manufactured goods in return for the services they provide. So , whether or not the British economy is running out of money, it doesn’t necessarily have anything to do with the service sector being the largest sector of employment. (More people are employed within the tertiary sector in China too – 32% vs. 25% employed by industry.)
            Now – given that Britain operates using a fiat currency, it’s actually impossible for us to run out of money. What’s happening at the moment (was happening?) is that we are buying things from foreign countries and those foreigners are then using that money to invest in Britain ( net foreign investment = net exports). In a way, Britain running a trade deficit is a sign that the world has high hopes for the British economy and wants to invest in it. The trade deficit only actually matters if you care about the nationality of owners in Britain (I don’t think most people do). Of course, foreign people could decide that Britain isn’t such a great place to invest, which would have a negative impact – but the fact is that the current trade deficit in of itself isn’t a bad thing or something which won’t correct itself if necessary (if the British currency devalues, British exports will become more attractive.)
            “What I was talking about production. Industrial status is defined by what you produce, not by what you consume.”
            But given that Britain does not particularly want to produce things, that it does in fact produce things (in large quantities) where necessary, that it can exchange manufactured goods for services and that the *worst thing* that could happen would be a natural balancing of the trade deficit – would you agree that your characterization of Britain losing the “productive war” with china was a little overwrought?

            RE: your description of British economic history from the middle ages onwards, as written, I don’t have any particular disagreement – but I have a feeling you might be implicitly concluding consequences or causes of these changes with which I’d disagree.
            Anyway, it’s past my bedtime. I’ll make sure to reply to the more general points when I’ve had a bit of rest…

            • johnqpublican

              your description of British economic history from the middle ages onwards, as written, I don’t have any particular disagreement – but I have a feeling you might be implicitly concluding consequences or causes of these changes with which I’d disagree.

              Possibly; but I thank you for recognising that I understand how we got where we are. Since I’m largely arguing about how we got where we are, that’s useful.

              Regarding your figures, let’s see if my model predicts them.

              The following things should be true if my model is accurate. Firstly, economies which began to industrialise earlier will also progress slower, for several reasons including the inability to import technological advancement wholesale. Commensurately, local variations (such as scale of polity, population, hydrogeography, local history of warfare, etc.) will affect exact rate of progress. Thirdly, the approximate order of industralisation goes Britain, then a group including Germany, Italy, Spain, Austria and the United States, then a group including Australia, Japan, Canada, Russia and China.

              We should see that nations in the early phase of industrialisation, or just prior to it, have a proportion of the population dedicated to primary industry that is between 70 and 90%, with manufacturing industry providing between 5 and 20%. We should see that in nations climbing the industrial curve these numbers slowly reverse, until manufacturing industry reaches between 40 and 50%. During the industrial era the number of people employed in primary industry would fall steadily, though this effect will be less marked in very, very large nations. As a nation begins to slide towards post-industrialism, there should be an identifiable peak in employment in secondary industry, which then declines steadily. Tertiary industrial employment should grow in proportion.

              That’s pretty much what we do see in each of these cases. The following factors affect the exact shapes of the curve; sheer scale as in the case of China, remarkable social structures as in the cases of both Japan and India though in opposite ways, how many times your manufacturing infrastructure got bombed back to the stone age, and so on. But I would expect to see Germany falling slowly away from it’s industrial peak: since German manufacturing industry employed over 50% of all Germans between the late 1930s and the late 1970s, that fits. China is still on the upcurve: and we see that Chinese employment in manufacturing has risen steadily throughout the last forty years. Japan’s curve is very quick and influenced by the post-War reconstruction effort as well as by the extraordinary industrial effort of the Meiji period; and their percentage of the population working in manufacturing is also declining. The pre-industrial nations you mention (such as Ethiopia) are of course still climbing the curve, so I’d exect to see figures indicating small but growing amount of industry and very large, but shrinking, amounts of farming. Of course, in Ehthiopia you also have to remember that there’s been a bit of a famine problem for a fair old while.

              The one thing in these figures that really surprises me is the strength of the tertiary sector in China; it occurs to me to wonder if the pre-existing multi-millenial bureaucratic tradition there, combined with the bureaucratic bloat of Communism, affects that number.

              None of these are actually predictions, of course; these are things we already knew, so it’s not surprising my model accounts for them. When Marx wrote Kapital, he was proposing an analytical model which made some predictions about the future. His model was very good, and remains very useful; but virtually every prediction it made was wrong.

              If Britain’s economy becomes increasingly dependent on finance and less dependent on actually producing anything of value; if America, Germany, Italy etc. continue to follow the same general curve, and if China, Southern America and then (tribalism allowing) Africa get the chance [1] to go into full industrial status, then you’ll know my model works, and so will I.

              The value of this analysis is that it is about systemic processes. It looks at patterns which have repeated through time after first being seen in one or other place; modeling the processes which have allowed nations and economies to scale and to progress as fast as possible. One of those is hierarchy; concentration of resources. Another of those is regulated market capitalism; it introduces a very strong profit motive while maintaining the function of centralising resources hierarchically.

              Other notes:

              Britain is actually ranked as the fifth or sixth largest industrial producer in the world (after the US, China, Japan, Germany and maybe Brazil [derived from CIA fact book])

              Interesting, I was under the impression that was no longer true. Also, are these figures per head or total unit production? The latter is the one which would be relevant in assessing my model.

              Let’s take the example of Hong Kong.

              Yes, lets. A tiny island that has made its way for centuries as a client of more powerful economies, and has been used primarily as a base and legitimacy shield for piracy, imperialism, drug-smuggling and money-laundering. Hong Kong is not a self-sufficient economy and hasn’t been since the British invented it. All it needs is one bad day in China and Hong Kong starves. Let us not offer Hong Kong as a model for the future of the global economy, please? That would seriously depress me.

              The problem with relying on other people to make everything is that it also relies on fictitious worth. Too much of one’s market value becomes based on confidence, rather than actual capacity. People lose confidence (look around) and it all goes very badly wrong.

              My interest in this series has always been about this question: follow the trend through. Places that industrialise get rich; they start relying more and more on financial, rather than real, worth. They start relying more and more on a network of trade in which other people do all the work of production and we still get all the money: in other words, the further through the industrial process a national economy gets, the closer that nation as a whole moves to the centre of the Great Machine. On the global scale, the nations which got industrial first are now the venture capitalists to the world; as with the national scale, the machine works well. Many, many people at the edge of that network feed money into the G8 nations, just as many people at the edge of a national economy feed money to a tiny number of very rich people and institutions.

              So we go down that path, then Europe and Russia, America and Japan (presumeably all the making-things is now being done by India, China and South America); then they follow us, and now only Africa is actually producing anything. Eventually they will also educate their people to extent that their people do not want to be wage-slaves to the world. Who’s left to do the making? Where does our actual economy come from as a species?

              Another one to consider. As has been discussed earlier, the primary method for allowing a country to compete at making real things after its population are educated enough to reject manual drudgery as a career option, is automation. Raise the technology level. Unfortunately, we’re not educating our populaces anywhere near enough to allow everyone to work in cybernetics maintenance; and even if we were, there wouldn’t be enough jobs. The natural end of this process is a world where everyone has a job which today would be seen as white collar; where do they come from? We’re neither creating them fast enough, nor educating people for them fast enough.

              [1] Given current rate of progress, the counter-weight of vast, disease- and slum-ridden cities and the dependence of all their economies on non-sustainable raw material exports: and given the predictions they’re currently making about petroleum yields, those countries may never get properly out of agrarian status.

              • Mark

                Ok…. given that GDP expresses the `value added` in a given region rather than that attributable to citizens of that nation who happen to be owners of capital anywhere in the world (which is shown by GNP), wouldn’t it be the case that if large amounts of money are traveling from poor countries to the G8 this would be shown by a large discrepancy in GDP and GNP figures? Namely that the GNP figure would be higher than GDP in the West due to them deriving income from foreign sources but the other way around in poorer countries?
                If you look at the figures for the UK you see a GDP (all figures per capita since that’s all wikipedia has) of $36,000 and a GNP of 33, 800. Hmmm. [the figures for the other leading western countries are fairly similar – some have slightly higher GNP, some slightly higher GDP, but generally the figures are fairly similar.]
                Looking at a developing country, more or less at random – Cameroon has a GDP of $2150 a year, and a GNP of $2120. Not much in it.
                China $5963 v. $5370
                India $2,762 v. $2,740
                There may be some countries which are sending a significant proportion of wealth to owners of capital in foreign countries but while this might be significant to the poor people living within those countries it is not a sufficient explanation for the wealth of the west – because poor countries simply don’t produce enough to make a difference. The fact is that the G8 countries combined have a GDP of 30 trillion dollars a year – that’s almost half the world total. If we add China and India to the G8, we have a total of 40 trillion, more than half of the world total of $68 trillion.
                So is it the case that poorer nations are funneling vast amounts of money to the G8? Maybe by their standards, but given that the total amount of industrial/agricultural production and services within the continent of Africa, *regardless of who the owner is* is less than the GDP of Germany, this cannot be a significant part of the explanation for higher living standards in the west.
                The fact is, that in the last hundred years British agricultural and industrial productivity has increased massively – Britain produces more industrially than it ever has (in terms of value – the figures in the previous post were total output, not per-capita.) with an ever decreasing proportion of the population, due to improvements in technology. 1% odd of the population can provide for 60% of our food needs (and we waste how many billions of food a year… hmmmm.)
                Western countries are richer because they farm better, make things better and are better educated. You’ve seen the way they farm in poor countries, right? How does it compare to Britain and how do you think this ranks in importance as a cause of British wealth compared to Western ownership of capital?
                Secondly, is there anything wrong with foreign ownership of capital? Britain has been following the “Wimbledon” economic model for some time now – none of the major players are British, but the public still benefit from a nice tournament. British importation of goods represents foreigners investing in Britain – not the other way around.
                Now the security argument regarding food importation would be a good one except for the fact that now, the only sustainable way to live is to *not have* any major wars. Given the consequences of a major war, starving to death will be the least of our problems – far more important to ensure that international relations do not break down rather than “dig for England” and hope we can scratch out some kind of turnip based existence in the event of complete international political and economic collapse and possible nuclear holocaust.
                Hong Kong engaging in international trade in exchange for food may be dependent upon the good will of China. But what’s the alternative to this vastly wealthy metropolis?
                6 Chinese guys and a goat, living in a swamp, with an absolute *certainty* of famine whenever their local weather conditions aren’t particularly good. Time to concentrate on negating nationalistic ambitions me thinks.
                Increasing automation will probably lead to shorter work hours – working hours have been falling for several years as people decide to take a proportion of their wealth as increased leisure time. As far as I’m concerned, automation and super abundance are fairly good reasons (vital necessities) for social safety nets – but I have to say I have a hard time getting worried about improving industrial efficiency, automation and education. If the worst comes to the worst, we’ll just have to head back to the turnip farm.

                • Mark

                  Oh… and financial systems and services are immensely valuable.

                  • johnqpublican

                    Oh yes. And I discussed this in Great Machine II. Value != worth. I’m talking about real things: value is arbitrarily assigned.

                • johnqpublican

                  given that GDP expresses the `value added` in a given region rather than that attributable to citizens of that nation who happen to be owners of capital anywhere in the world (which is shown by GNP), wouldn’t it be the case that if large amounts of money are traveling from poor countries to the G8 this would be shown by a large discrepancy in GDP and GNP figures?

                  No, actually, I”d expect to see any such discrepancy vanishing into the off-shore bank accounts of people who are at the centre of the great machine: which is pretty much what the taxing authorities of the world think is happening too.

                  Beyond that, you’ll noticed I didn’t make any comments about GNP or GDP. I made comments about physical manufacturing. I understand the various ways people wish this wasn’t true, but it is still true that someone, somewhere, has to make something. Since I’m engage in a long-term analysis, short-term responses don’t help.

                  Based on what you’re pushing here, the ultimate goal of any economy is to have a 100% finance-based economy. Do you really think that’s a good idea?

                  So is it the case that poorer nations are funneling vast amounts of money to the G8? Maybe by their standards, but given that the total amount of industrial/agricultural production and services within the continent of Africa, *regardless of who the owner is* is less than the GDP of Germany, this cannot be a significant part of the explanation for higher living standards in the west.

                  You’ve put the cart before the horse again, thus ignoring every post in this series.

                  Money attracts money and power. If you start your game (for you, the game seems to start in 1750) with a small number of people having all the money and power (in this case represented by Europe and China, China being handicapped by scale) then you get what we’ve seen: a world in which investment comes from the West, return on investment goes to the West, and the African nations (for example) are waiting for a kind of global-scale ‘trickle-down’. In the mean time, they’re also sabotaging themselves with tribal warfare.

                  GDP and real things are not the same. GDP involves assessments of value that have nothing to do with worth.

  2. Mark

    Perhaps what the Icelandic experience shows is that in a settled agrarian society very few people are going to have the opportunity or desire to go- a- fighting. Fighting is delegated to the few who then establish themselves as political leaders (or the few who like fighting just establish themselves as political leaders anyway). Iceland wasn`t hindered by the economy of Denmark so much as it was hindered by the decisions of the King of Denmark – a man who enriched himself at the expense of the relative poverty of his people.
    Guess those Icelandic guys had just settled down a bit too much from their reaving days.
    The realities of low technology living leave communities vulunerable to domination by a military elite, but it doesn`t follow that such domination is to the advantage of the people living within the communities or that without such domination it would be impossible for societies to develop economically and socially.

    • johnqpublican

      Firstly, viking was the second biggest industry (after farming) in Iceland during the Confederate era, and was the origin point for pretty much all cash trade. It’s how most land-owners and godhi got their capital stake with which they bought their farms. Piracy leads to capital accumulation; in exactly the same way that taxation does. Your own later statement “the King of Denmark – a man who enriched himself at the expense of the relative poverty of his people” implies you agree. I pointed out this precise fact about the creation of relative wealth and you kept arguing with it; I’m glad to see I’ve convinced you.

      Secondly, viking was the fifth largest industry in Denmark at that time, after farming, mining, ship-building, and ocean-borne mercantile trade (mostly around the Baltic). Thirdly, the reason Denmark was able to achieve and maintain a polity scale which gave it a tax base 9 times the size of Iceland was that it was centrally controlled by a king who could bring overwhelming military force to bear, quickly, on anyone who didn’t pay their taxes. The Icelanders weren’t paying taxes to any king; they weren’t concentrating the resources of their society.

      The Danish polity was able to scale at low bandwidth levels due to implementing the Great Machine. Iceland chose an alternative route, which was fine right up until Harald Hardrada got his arse handed to him at Stamford Bridge and the expanding Danish polity began to look for new acquisition opportunities; whereupon, Confederate Iceland ceased to exist. That’s the point. Societies managed by the Great Machine are better at scaling, and better at aggressive expansion, while you’re still in a pre-industrial communications environment, than any alternative system yet trialled.

      Fighting is delegated to the few who then establish themselves as political leaders (or the few who like fighting just establish themselves as political leaders anyway).

      To any historian, this statement is risible. Read the Havamal, or “words from the wise one”: read the Confederates Saga, or in fact any of the others. Read the Tain. Read the Mabinogion; and read some damn history as well as the primary sources. Look at how often archaeologists find defensive walls around settlements: look at how many settlements were burned at some point during their occupancy. Look at the penetration of sword use into common society during the Despenser era. During the early medieval period, 100% of Scand adult society could use a knife or a stave combatively, and all men were expected to train in the use of the spear. Men who went viking and the war-bands of the Eorls were special cases, yes; but they also represented about 10% of the total manpower available in most states in early medieval Europe.

      I have commented before about the extent to which the distance between modern European society and pre-Enlightenment European society creates blind spots in the Western layman’s analysis. This is one of them. Do some reading.

      I have also commented before that I do not really have the time to educate someone who refuses to listen, argues the unarguable and takes three weeks plus a public flyting before they’re prepared to even pretend to bring evidence or analysis to the table. If you are trolling me it’s worked so far because I don’t like leaving your spoor lying about un-remarked but at some point, if you keep getting it this wrong, I am just going to have to stop rising to your bait.

      Unfortunately, your bait is well chosen; you’re good at making things sound plausible unless someone points out that you fail to substantiate and that you fail to question your own assumptions. You treat problematised terminology as if it had an abstract meaning (I point you to your remarkable attitude to the concepts of ‘capital’ and ‘wealth’). And you don’t seem to have the faintest idea of what pre-industrial society or economics looked like.

      • Mark

        I shall do some reading and get back to you with my conclusions.

        Thankyou for your suggestions.

  3. Mark

    By-the-by – I don`t disagree that people are able to gain wealth through banditry, I just take exception to your assertion that this is a vital part of the developmental process or that this process has anything in common with the acquisition of wealth under a modern capitalistic society and the rule of law.
    In the case of Denmark and Iceland, it really isn`t the case of “Denmark” dominating “Iceland” – it`s a case of a military elite dominating the ordinary peoples in both countries to almost everyones detriment.
    But, let`s save this for after i`ve read your suggested sources, eh?

    • johnqpublican

      By-the-by – I don`t disagree that people are able to gain wealth through banditry, I just take exception to your assertion that this is a vital part of the developmental process or that this process has anything in common with the acquisition of wealth under a modern capitalistic society and the rule of law.

      To start with, it’s not an assertion. It’s archaeological and historical orthodoxy; I’ve just pointed out that when most people say ‘king’ they actually mean ‘effective bandit’, which is a less orthodox opinion. I’ve also argued a case for a functional definition of capital which includes ‘publicly administered’ funds; specifically I’ve argued that tax is the earliest method of accumulating capital.

      Now, let’s talk about starting conditions. You can’t draw a line under history in 1775 and say ‘before this, no-one had capital’. The functions of capital existed before that. Equally, I argue you can’t do that with the Egyptian invention of money, either, though JSM would have said you could. The starting conditions are relevant, nay critical, to any systems analysis.

      Now, back to your earlier quote:

      Growing protectionism in the West would be a direct result of ignorance regarding international trade and/or the influence of certain special interest groups (owners of clothing factories for example)

      How do the ‘special interest groups’ influence politics? They are sitting on a huge pile of cash and they employ that cash to create the policies they want. Starting conditions for your system, in this case, are that a very small number of people have a disproportionate percentage of the money. As you point out, that gives them functional control of the system; they can get policies enacted which any economist (as you point out) knows are futile and counter-productive, but they can do it anyway because they already have a huge pile of money.

      This series of posts has been designed to contextualise the starting conditions for capital accumulation as a functional reality. The starting conditions were the creation of cities. It is at that point that people started accumulating wealth (taxing the peasants) which could then be employed to generate more wealth (in the early days, primarily by funding conquest and thus loot). From there to here is one line. At any given point you pick, there are a small group of people who already had a huge pile of cash, which as you have pointed out hands them political power over the rest of the people. Some inherited it; some stole it, some taxed to get it and some earned it. The number of people who earned it goes steadily up over time; but in any given generation, the only people who can be claimed to have ‘earned it’ are the first-time capital entrepreneurs: anyone who started their business with an inheritance or a loan did not earn their capital stake.

      That is why this is relevant to the modern robber barons and modern governments. The flow of money from the many to the few is a constant in the development of global economics. It’s simply what happened; again, I do not wish to argue whether it’s good or bad. It just is.

      In the case of Denmark and Iceland, it really isn`t the case of “Denmark” dominating “Iceland” – it`s a case of a military elite dominating the ordinary peoples in both countries to almost everyones detriment.

      An unexpectedly socialist argument.

      However, I was discussing the competition between socio-economic blocs. Iceland formed a unitary economic and political entity; as did Denmark. One had a king and paid taxes to him, thus centralising both administrative authority and resources. The other did neither. When they met in direct market competition (i.e. a war) the one with the bigger economy (i.e. Denmark) won. That’s what happens today when Cisco buys Linksys in order to get hold of their cheap wireless router design. Denmark absorbed Iceland to enhance the Danish King’s tax base; scaling up. Hence also my comment about the anti-competitive implications of large capital accumulations that can survive the death of the individual.

      If your system includes as a starting condition that a very small number of people have an overwhelming quantity of the cash, then you don’t have free-market capitalism, because even if you remove the state and its regulation from the picture, the action of the existing blocks of capital is anti-competitive. If you start without them, but permit inherited wealth, you will have the same situation inside of three generations.

      If the rules stay the same.

      My argument in this series has been that the reason this pattern has been implemented so universally is that at low bandwidth levels, the only schema which scales, and certainly the schema which scales best, is hierarchical centralism. Scale is a huge advantage in direct competition. Therefore, scaling well is crucial. My conclusion is that since the West is no longer low-bandwidth, it would now be possible to experiment with other models; but that we don’t, because precisely as you said above, the “special interest”: the robber barons, the people at the centre of the Great Machine, don’t want us to.

      And my exhortation to the reader is that if the OSS movement can beat the capitalists at their own game, so can the rest of us.

      You said earlier that I don’t believe in decentralised decision making. I believe in it very passionately; but history is very short on examples of decentralised entities winning when they compete with centralised ones for resources. I believe that decentralisation is a function of communications tech; and have argued that over the last six posts. I also see a functional effect of pre-existing capital wealth, which is that it is anti-competitive; I’m not the first to see it, that’s why traditional wisdom says monopolies are bad. The only way I can see to get out of this trap we’re in is for the decentralised, the non-hierachical, to out-perform the capitalists in their own market. The Open Source movement have showed people how.

      • Mark

        What do you mean by centralisation?

        • johnqpublican

          … Ok, now I’m sure you’re trolling me.

          Dictionary.com says:

          “centralisation:-

          noun
          1. the act of consolidating power under a central control”

          When people thousands of years ago started to tax, they created centralised resource accumulations (i.e. capital wealth). At every stage of this process, it’s all been about moving as much of the resources as possible into the hands of people whose purpose in society is to adminster huge resources: despots, aristocrats, and corporate boards of directors.