The ramblings of an Eternal Student of Life
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Friday, October 17, 2014
Economics/Business ... History ...

I’m presently listening to a Teaching Company audio course on “Big History”, by Professor David Christian. At first I was a bit cynical about the whole “big history” concept, i.e. a sweeping review of all known major events from the Big Bang (13.7 billion years ago) to the modern homo sapiens civilization now existing on planet Earth. I figured it would be a bit “fluffy” and insubstantial, but I’ve been pleasantly surprised by Professor Christian’s interesting insights and ability to draw relevant themes from “the really big picture”. Some of the major themes from his sweeping panorama approach regard the increase of complexity, the increasing density of information flows, and increasing concentrations of usable energy. But the good Professor also offers occasional comments regarding trends specific to our own little corner of the Universe, i.e. human history and modern civilization.

I’m getting near the end of Christian’s 48 lectures, where his focus zooms in on the world that we know or can remember (or at least have heard about, like World War 1 and 2 and the Great Depression). Professor Christian made a somewhat startling observation about capitalism, i.e. the modern economic system that we depend upon to maintain our present lifestyles here in the greater suburban precincts of America. I suppose that many of us “comfortable but concerned” citizens, those having any sort of liberal sympathy favoring social justice, maintain a love-hate relationship with capitalism. On the one hand, we revile it for all of the unfair economic consequences that it has for many people (e.g. the long-term unemployed, family farmers, inhuman working conditions in the eastern-world factories that produce most of our consumer goods . . . just to get started). Not to mention its lack of focus on long-term sustainability issues (with global warming presently being “exhibit # 1” in that regard).

But on the other hand, we usually don’t refrain from enjoying its fruits, such as convenient shopping opportunities on Amazon and other on-line retailers, affordable prices and wide variety at supercenter stores like WalMart and Home Depot, modern technical wonders from Apple and its less glitzy/less expensive competitors (Dell, Samsung, HP, Lenovo, MS, etc.), relatively cheap energy and personal transportation options, and wide varieties of food (both raw and prepared) available with 99.9% reliability. No, we don’t simply enjoy these benefits — we have come to depend upon them and see them as something of a right. Thus, we get very upset if one of them is even temporarily curtailed or doesn’t work right.

So, Dr. Christian astonished me a bit with an interesting observation that he made regarding capitalism, during his lecture #42. In a nutshell, the Professor contends that a necessary pre-condition for capitalism to work is economic inequality across the human species. He compared this to the second law of thermodynamics, the entropy law, which requires areas of temperature and energy inequality in order for any work to be done. For example, in the old-fashioned steam engine, there needs to be a very hot region (water heated up to become steam vapor), and an adjacent cold region (the area which the steam vapor can expand into). When there is steam on one end of a cylinder and colder air on the other, the cylinder can move, and work can be accomplished. It’s about the same in any automobile engine, except that hot steam is replaced by the hot gas from the explosion of gasoline. Even if you get a Prius or Tesla, there is still an energy gradient in the battery, with active energetic ions on one side and less energetic stuff on the other, causing the flow of electricity.

Does this analogy really apply to our modern economic world? Do we need flows of exploitation between the rich and poor to get the engines of commerce up to speed? Would things ground to a halt if we all had equal shares of the economic pie? You would think that we could all continue to trade according to what we do best or what resources we have easiest access to, and that alone could maintain an efficient and growing economic system. I suppose that the problem lies with one of my underlying assumptions, i.e. that we could all be equal in terms of material wealth while at the same time having possession of differing abilities and resources. E.g., you are a better wood crafter, I am a better crop grower, or a professional auto repairer. You have ownership of cut wood, I have ownership of farmland or machinery. We find things to trade, things I can make or do that you need, things that you can make/do that I need. But somehow, we all maintain the same “standard of living” in terms of material needs and comforts.

Well, in such a system, when multiplied for billions of people across the entire planet, you could never guarantee that everyone would remain “equal”. Even if you could somehow start everyone on an equal footing, some will be luckier than others over the long run. Wealth will accumulate to some, others will be below average, many will be destitute. In a very complex system where chaotic effects start to arise, it is not surprising that some people will get VERY rich, while a lot of others will languish with below-average economic circumstances. And too many will become VERY poor, simply because of the rolls of the dice. Complicated inter-dependent systems have “echos”, such that a good break will amplify the effects of future good breaks, and bad breaks tend to accumulate and get worse over time. The rich see the weakness of the poor, and exploit that situation to get even better (and ultimately unfair) deals from them.

One way around this stubborn fact might be to IMPOSE equality. The great experiment in this, of course, was communism. The idea behind Marxist communism was to vanquish the notion that people have individual ownership of things. No one owns anything, not even their own skills and abilities. Everyone owns everything, including everyone else’s skills and abilities. Give according to your abilities, take according to your needs. Sounds great, but the ultimate contradiction soon becomes apparent. I.e., that you can’t tell people that they own nothing and at the same time own everything, and expect things to get done. It took almost a century and a lot of angst and poverty in Russia, China and other nations, but history eventually proved the point.

So, for now, it looks like we are stuck with capitalism and its inherent unequal sharing of the pie. I just read an article in The New Republic complaining about the nasty social justice side-effects that is causing (“Amazon Must Be Stopped” by Franklin Foer). There was a reply a few days later by Joseph Nocera, a middle-of-the-road op-ed columnist for the NY Times, entitled “Amazon Plays Rough. So What?” As Mr. Nocera points out, there are specific issues that Amazon can and should be held to task on, e.g. treatment of the workers in its warehouses. But, a sweeping revolution against Amazon is not in the offing, unless you want to risk collapse of the economic system that gives those of us in the “enlightened” suburban class the time and information and resources to ponder social justice matters. Welcome to contradiction-land; as with Hotel California, you can check-out any time you want, but you can never leave.

◊   posted by Jim G @ 5:25 pm      

  1. Jim, You are 100% right on more than one point in this post. First, I think Prof. Christian’s course sounds great. If I were younger, I’d make room in my time schedule to study it. The best I can do at this point is make a, hopefully, useful suggestion regarding this general topic.

    Your comments about Capitalism and how it’s been applied in various areas of the world, Communism and how it has been applied in different countries and cultures are right on the mark. In fact, as I was reading I found myself thinking, “but you didn’t mention ‘this’”; and the next paragraph was practically what I had been thinking. (A lot of times, as you know, I often will disagree with you – what else is new?) But here, no disagreement.

    So at the end, I found myself thinking, it’s obvious – as Pope Francis implies (imagine! me thinking along with Pope Francis!) that some other form of economic system is required for this new era mankind is just beginning. It appears either that the scientists are listening to Pope Francis or the same idea has become evident to both divergent groups separately – scientists and Pope F and those who agree with him. (Some within his group, it appears, do not agree with the Pope. . . but that’s another story.)

    I found myself thinking, OK, the first step is to figure out and define the problem. It seems these two (Prof. Christian and Pope Francis) have nailed it. Another case of who’d’ve thunk!

    But then I find myself thinking that I for one am beginning to wonder exactly what kind of system might be used to replace Capitalism and/or Communism. Defining the problem is coming to the point where some place someone must come up with at least some possibility of a suggestion of what to substitute. I definitely am *not* saying here that I have a solution; I’m sure those who think about economics are working on how to find a solution. But I simply must add my two cents to this particular discussion. I must also say I am not suggesting in any way, shape, or form that I know anything that comes close to being able to find a solution. But there *has* been something that for years I’ve often wondered about. So. . . .

    Up to this point competition has been the basis of almost everything in our Capitalist society. I’ve always found competition somehow to work at odds with what one wants to accomplish; I guess it’s just me. Communism has “pretended” (is there a better word? I like this one) to use cooperation, but it really does not. Cooperation has only been a theory that has never really been put to use in Communism – if indeed the idea of cooperation is included in Communism.

    I wonder what a society with a totally new economic system based on *cooperation* would be like. I don’t pretend to have any iota of an approach to starting work on such an economic system. I *would* like an economist to work on what such a cooperative economic system would be like, how such a cooperative economic system might work, etc. Maybe someone somewhere has been working on such a system for some time and just not been accepted. If there has been such an individual, I would like our society to take that person seriously and start to see how it might work. How about people – at this point it’s really the entire world, I think – cooperating economically instead of it being the “get as much as you can and let anybody else behind” system we now have, even in the “new kind of Communism” China sometimes talks about and has attempted lately in dealing with the West.

    I’m sure that, as with every other economic system, a cooperative economic system would have its problems, mistakes, and eventually, over a period of use be found no longer workable, useable, or appropriate. But at this point the world seems to need something different that fits what seems this growing point humanity has reached and has started to evolve. Why not try something never before (at least I think at this point) tried? Think of it! An economic system based on cooperation. Would the poor in Africa be as poor if rich countries shared – not in the “everybody shares equally” idea of Communism but in a concept of, “with cooperation we all will advance faster and better” approach, for one simple example from someone who knows little or nothing about economics. I wonder what that would be like as an economic system. Just asking. MCS

    Comment by Mary S. — October 18, 2014 @ 2:27 pm

  2. I’m a little surprised that you are “astonished” that some professor would describe capitalism as exploitive. Did you forget those “dismal science” classes that you took?

    Comment by Zreebs — October 25, 2014 @ 6:59 pm

  3. Hey Steve, recall that most of my classes were at Rutgers at night, and I had Dr. Dave for 3 classes. Although the good Doctor occasionally felt a twinge of populist sentiment, for him, capitalism had been ‘beddy beddy good to me’. His colleagues weren’t exactly Marxist firebrands either. This was an evening program, remember. At Rutgers-Newark, most of the socialists taught by day. They were trying to reach the younger minds, and not the older working stiffs who mainly comprised the evening student body.

    Comment by Jim G — October 28, 2014 @ 7:46 pm

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