Comments (133)

• Nancy L. Boone

  What a great way to bring economic theory into everyday life! This is what makes economics interesting. I have used these types of articles as I have tutored. It seems to take away the fear of the subject and help students understand how much of their everyday lives involves economics.

  Published: December 20, 2007 10:01 AM

• Inquisitor

  Well this should make Theresa Nielsen happy. :) Good article, it conveys the concept nicely.

  Published: December 20, 2007 10:06 AM

• ajax

  Great article!

  Minor correction on the second scenario: the job would get done in 17 minutes, not 12. You both couldn't start at the same time as you would have to wait for at least one stall to be cleaned in order to bed. So your sister would take the 5 minutes to clean the first stall, and then you could start. So 5+6+6. This is still lower than scenario 1 and this additional time would only count for the first stall.
  If there was only two stalls then, it would be more efficient if your sister did both - 16 minutes. It is when the 3rd stall kicks in that the division of labor advantage bears it fruits.

  Published: December 20, 2007 1:17 PM

• Susan Hogarth

  ajax:

  Thanks! You are absolutely correct. That five minutes is taken up by me making a fresh pot of coffee for afterwards :) And evidently my brain needs the caffeine!

  Published: December 20, 2007 1:51 PM

• ajax

  Correction to myself. Actually the division of labor would work with just 2 stalls. If the sister cleans and beds both...total time is 16 min. If the sister cleans both and has you bed the first while she cleans and beds the second(she will be done cleaning both while you are still bedding the first), total time is 13 minutes. My bad

  Published: December 20, 2007 1:59 PM

• Jim

  Susan & her sister provide an example of something more profound than Ricardo's insight.

  Just ask ourselves how much money is involved in such work and what lessons that offers.

  Just think about how people who know each other and share common interests will cooperate without "exchanging" tangible goods or services. Even if we do not know each other but share common interests [as Misesians for example], we cooperate.

  What is it that makes us distinguish such dealings from direct exchanges [barter, including money]?

  My answer is that in the former cases we give credit, but in those where we do not know and trust the other parties we demand immediate exchanges.

  Published: December 20, 2007 4:42 PM

• cipher

  Wouldn't it be even more advantageous, comparatively speaking, for the stable owner to fire both you and especially your sister, replace you both with, say, 2 imported "unskilled laborers of America" from, say, Central America or Mexico, pay them each 1/3th your sister's wages - no benefits, maybe even cash "off the books" - while maintaining his stable's pricing structure for services rendered thereby pocketing his increased profit margin so as to retire early and move to Florida or buy a bigger SUV or a second home? While my example doesn't offer you or especially your sister any real advantage, it does closely compare with the current American domestic labor/services market. And one more thing: if the stable owner's clients complain of picking-up the "public goods" tab for your sister's replacements' health care, housing, education, and food assistance; or if your sister complains openly of her lost lifestyle, then the stable owner can easily hire a media consultant or think tanker to label the complainers as "nativists", "xenophobes", or even "nazis" in order to bully them into silence.

  Published: December 20, 2007 9:16 PM

• newson

  so cipher, what is your miracle solution for illegal immigration? amnesty? open borders? repatriation?

  anyway, translating the scenario to the black market changes nothing. let's imagine two illegals, both stablehands, paid cash in hand at third-world rates. the mexican is a better worker at all tasks than the his guatemalan pal. they can both collaborate more effectively, and pick up there meagre bounty quicker, if the guatemalan sticks to whatever task he's least bad at. ricardo's law of comparative advantage still holds. what's your real point?

  Published: December 21, 2007 12:58 AM

• Peter

  Then (a) Susan and her sister may be slightly worse off, but not much: they can do something else; (b) the Central American or Mexican workers are much better off (esp. considering their illegal status makes it much harder to find employment); and (c) the stable owner uses the extra profit to expand, and employs even more people! Yay!

  Published: December 21, 2007 6:14 AM

• gene berman

  Excellent article. Countless examples similar to that drawn by Ms. Hogarth might well form instructive when employed to impart economic principles to the unacquainted--right down to the elementary-school level. Actually, my opinion is that some of the lessons of economics are actually easier to teach than might be thought--were the potential learners not somewhat deliberately shielded from such information and the lessons to be drawn.

  And I wouldn't even shy away from a frank statement of one of the fundamental truths to be had from studying Mises: that specialization and its effects on human well-being and satisfaction-attainment are so central to civilization, its maintenance, and its spread, that "Law of Comparative Advantage," while certainly accurate in a descriptive sense, hardly does justice to the enormous insight contained. Mises' suggestion was "Law of Association."

  Published: December 21, 2007 6:26 AM

• P.M.Lawrence

  But Peter, look around you. The structural incentives are for downsizing, deskilling and outsourcing these days; the leaks are gaining on the pump. So (a) is only accurate about Susan and her sister's physical ability to do something else; unless and until something else opens up, they are worse off from unemployment, and with the leaks gaining on the pump that happens more and more; this growing unemployment feeds back into the leaks by hollowing out the middle class. (b) is true, but doesn't help Susan and her sister or anyone in their position. As for (c) - while the stable owner could use the extra profit to expand, precisely because the leaks are gaining on the pump that isn't a wise decision, so either he doesn't do it or competition puts him out of business in short order (remember, the hollowed out middle class has to cut back, and gains for their replacements don't make up for the fall in domestic demand - particularly if they were sourced outside the country). Either way, the stable owner does not employ even more people at all, or not for long. No "yay" about it.

  Published: December 21, 2007 6:57 AM

• Inquisitor

  So Cipher, what are we to do then? Close the borders and toss out all those filthy ingrates? Or..? Perhaps weaken the institution that has intervened and distorted the market with minimum wage laws, welfare provisions, control of the borders etc etc.?

  http://www.mutualist.org/id4.html

  Published: December 21, 2007 7:42 AM

• C

  Where is the Mexican government in all this?
  Their economic base is growing with American dollars.The migrant workers should apply for work visa's like every other foreigner coming to America to work.

  Published: December 21, 2007 8:34 AM

• Susan Hogarth

  Cipher asks: Wouldn't it be even more advantageous, comparatively speaking, for the stable owner to fire both you and especially your sister, replace you both with, say, 2 imported "unskilled laborers of America" from, say, Central America or Mexico, pay them each 1/3th your sister's wages - no benefits, maybe even cash "off the books" - while maintaining his stable's pricing structure for services rendered thereby pocketing his increased profit margin so as to retire early and move to Florida or buy a bigger SUV or a second home?

  Evidently it is not, as my sister still has her job (I couldn't be fired as I was just 'pitching in' - volunteering - for the morning chores).

  Something that may not be clear from my post is that my sister is, in fact, a very skilled professional and her duties include much more than stall-cleaning (this was a holiday morning where everyone had the day off and my sister - stable manager - came in to do feeding and a minimal cleaning for the comfort of the horses). Unskilled labor could not possibly replace her work with the breeding/planning/stallion handling/client relations aspects of her job. What unskilled labor COULD do (and does) is free up more of her time *for* those professional duties so that she spends less time working at the (relatively) less-skilled mucking-out type jobs that I described here. This makes her even more valuable to her employer, and allows her to capture a greater wage. AND it gives a (relatively) unskilled worker a job. And I have no idea why the workers being from elsewhere originally should make a bit of difference. If someone from Pennsylvania is hired to take a job in Maryland, how is that different than if someone from Mexico is hired? Do you just dislike brown people?

  Published: December 21, 2007 9:14 AM

• Robert M.

  In all fairness Susan, you must realize that if someone is in this country illegally, they often work in an "off the books" fashion that has many benefits to the employer (such as a working for pay that is below the minimum wage, no taxes, and so forth.) If it weren't for ridiculous labor laws, I wouldn't care where they were from. But unfortunately, it does matter. Or you could just call me a racist, if that works for you.

  Published: December 21, 2007 9:58 AM

• newson

  to cipher:
  there will always be a positive wage differential in favour of legal workers over illegals, given equal skills (think about employers' risk of fines, and the very instability of this clandestine workforce). if the work could be done by unskilled illegals, chances are it would. think lawn-mowing, or baby-sitting in california.

  to p.m.lawrence:
  downsizing, deskilling and outsourcing - where do they fit into this story? illegal immigrants have indeed lowered unskilled labour costs. but cheap illegals have also lowered the cost of many products consumed even by poor american consumers (fruit/vegetables, amongst others).

  if one stable could make abnormal profits from employing illegals, and get away with it, you would find that others would soon copy, and profits would be normalized across the entire stable industry. there would be increased competition for illegal labour, which is a step in the right direction in improving their lot.
  i think your concern about the hollowing out of the american middle class is valid, and i think you'd find the austrians are equally concerned about the parlous state of the american economy.

  acquaint yourself with the austrian view of the monetary regime, and you'll find plenty of reasons to despair about joe average's situation. ricardo's not one of them.
  

  Published: December 21, 2007 10:08 AM

• Susan Hogarth

  Robert,

  Cipher didn't mention 'illegal'; he said 'imported'. Was there some codeword I was supposed to recognize? Hiring illegal workers does come with a 'risk premium'. Believe me, many unskilled (and skilled!) workers who are native work 'off the books' as well; and bless 'em for it!

  Published: December 21, 2007 10:27 AM

• Michael Gilson-De Lemos

  Charming article which itself demonstrates the principle of advantage or division of labor...since no one elese now need write it.

  Published: December 21, 2007 3:17 PM

• cipher

  Susan,

  I like "brown" people best when I visit them in their native countries/cultures or when they visit (not set-up housekeeping) here.

  Competitive Advantage implies competition between two or more resource, service, or product providers be they laborers, high-tech skill sets, or cultures/nations. Your use of "...unskilled laborers of America..." seemed a dodgy rhetorical device intended to pay tribute to the all-important Relativist "virtue" known as Inclusiveness/Diversity in an otherwise delightful illustration of the division of labor. That's what stuck in my craw so to speak. In America and much of the West - unlike the rest of the world - capital is now free to choose from a global labor pool (physical and/or intellectual effort exchanged for wages = labor) in search of the least cost alternative supply for a given demand while also possessing the means with which to influence the making of law to its particular rent-seeking advantage (arbitrage). Those who "play by the rules" end up subsidizing those who choose not to. Playing along and celebrating diverse and competing "laborers of America" may feel Libertarian and therefore good, but the implications of modern global labor arbitrage upon the ancient and esteemed theory of competitive advantage permeate the horse stable, factory, and laboratory alike in ways that may neuter or make void the worthwhile pursuit of a libertarian-oriented society.

  Published: December 21, 2007 6:32 PM

• Brainpolice

  Forcibly restricting the free movement of labor, in the name of protecting stodgy old anglos who can't compete, is what truly makes the persuit a libertarian society void. Of course, nationalists cannot be expected to understand that free association has pluralist implications; as soon as it doesn't unilitaterally favor their group, they start to oppose it. Oh, and support for pluralism does not equate to moral relativism. I'll out-ethical-objectivist you any day.

  Published: December 21, 2007 8:36 PM

• P.M.Lawrence

  Newson, downsizing, deskilling and outsourcing aren't part of the original story as told; as Susan Hogarth clarified, that's not the situation there.

  However, once cipher described a different story, one more representative of what happens today, Peter tried criticising that story. That story is the story of a lot of us, not Susan Hogarth's story. And downsizing, deskilling and outsourcing turn up there. As I said, look around you.

  Published: December 21, 2007 10:59 PM

• IMHO

  I appreciated and enjoyed the article. I am, however, at a loss as to why it is that people try to shut down discussions concerning our borders by tossing out the race card.

  Consider what may happen in Europe should the Lisbon Treaty be ratified. It will have an impact upon the sovereignty of each country. Consider how this started...the creation of the Euro and the opening of borders.

  Now there is talk of an Amero and international trucks traveling unrestricted from Mexico to Canada. At first glance, that may sound all warm and fuzzy to someone in favor of the free market; but it looks a lot like the beginnings of an EU dressed up in a different package.

  The right to free association needs to be balanced with the protection of our sovereign rights. Or would you prefer to share our sovereignty with Canada and Mexico?

  Published: December 22, 2007 5:33 PM

• newson

  pm lawrence says:

  "downsizing, deskilling and outsourcing aren't part of the original story as told; as Susan Hogarth clarified, that's not the situation there.

  However, once cipher described a different story, one more representative of what happens today, Peter tried criticising that story. That story is the story of a lot of us, not Susan Hogarth's story. And downsizing, deskilling and outsourcing turn up there. As I said, look around you."

  so write your own article/story! and cipher could probably do likewise, but don't drag comparative advantage into it, unless you can show how it's relevant.
  

  Published: December 22, 2007 10:11 PM

• newson

  note to cipher: it's the law of comparative advantage, not competitive advantage. perhaps you've not understood the rest of the article, either.

  Published: December 22, 2007 10:20 PM

• Gerard Bendiks

  IMHO:
  The right to free association needs to be balanced with the protection of our sovereign rights. Or would you prefer to share our sovereignty with Canada and Mexico?

  REPLY:
  I'm confused...

  Free association assumes that individuals do so because they are sovereign individuals. What's there to balance? The only thing I can think to balance out the sovereignty of individuals is to have a few more sovereign individuals to keep the party happening.

  And then I'm not very clear on the "sharing our sovereignty with Canada and Mexico". Who's sovereignty? "Ours"? Mine or yours? I suppose that "our sovereignty" thing means you 'n' me, and since this land is yer land and this land is my land...why can't my desire to share the sovereignty (that's mine) with who I wanna share it with and then you can also be free to not share your little bit of sovereignty.

  If this sovereignty is "shared" and you 'n' I don't agree with whom to share it with....should we draw straws or just resort to might-makes-right to see who's bit of sovereignty will hold sway at each and every situation that's "down the middle"?
  Me thinks this whole sovereignty thing is a crock and is simply a plot by secret-handshake conspiracists with ugly shoes to cause civil unrest amongst The Peoples for no reason at all.

  Published: December 22, 2007 10:31 PM

• IMHO

  Gerard (or should I say "Citizen of the World"),

  How about a reality check. If you think that the creation of an Amero Union means that you're going to end up with more freedom, more money in your back pocket, and the equivalent of a Woodstock lovefest, then you're going to be sorely disappointed. What WILL happen is that there will essentially be one nation where there was once three, a society where one-size fits all, and it will be decided that the U.S. should carry the burden of three welfare states. If you don't believe it, then consider what has happened ever since the U.S. began to centralize its power, gradually and forever taking away the sovereign rights of the states. Or do you prefer the idea of the states giving up their sovereignty so we can have one big national group hug. :\

  We're not on Star Trek, and this isn't the Federation of Planets.

  Published: December 22, 2007 11:56 PM

• Blue Eyed Son

  Where are we going with this innocent article on the benefits of division of labor? We are going right to the heart of the question for the 21st Century. Does the race of a people matter? The Mises and Lew Rockwell boys have beaten the tar out of the socialists. Now they must take on Kevin MacDonald, Richard Lynn and Tatu Vanhanen. Good luck.

  White people in moderate numbers easily assimilated in America. This was the case until 1965. The Amish get along fine in America, without state hand outs. Can Mexicans and African Americans do the same?
  

  Published: December 23, 2007 1:22 AM

• P.M.Lawrence

  Hang on, newson. Why seek to censor us? If we took off in high dudgeon as you suggest, we would be leaving Peter's digression standing unchallenged. If your complaint has any merit, you should be complaining about what he wrote - not about a rebuttal of it. By allowing his stuff, you open the door to objections to that.

  Published: December 23, 2007 1:49 AM

• newson

  pm lawrence says:

  "Hang on, newson. Why seek to censor us? If we took off in high dudgeon as you suggest, we would be leaving Peter's digression standing unchallenged."

  
  i say: actually it was cipher who hijacked the ricardian story and took it off to immigration/exploitation-land, where it's stayed ever since.

  peter gets my vote because i agree with him, and i like his jocular style - maybe it's not a happy-ever-after-story, but it's not a greek tragedy, either.

  as for deskilling,offshoring, deskilling etc, these are valid concerns, and i'm sure someone will post an article addressing these very issues, where all and sundry can get into the ring for a bit of jelly-wrestling.

  Published: December 23, 2007 4:56 AM

• P.M.Lawrence

  Gotcha, newson. I gave you plenty of rope.

  Sure, cipher digressed. But, you implicitly did not object to the digression when Peter ran with it - and just there you have come out and admitted explicitly that you don't object to it when you like what is presented.

  You have no grounds for objecting to the digression; you have accepted it. You touch it, you bought it. Your objection is selective - and that's an attempt at censorship.

  Published: December 23, 2007 9:59 PM

• Bill VA

  When these numbers are applied to a larger number of stalls, the result is interesting.

  
  The givens: Susan cleans a stall in 15 minutes and beds it in 5. Sister cleans in 6 minutes and beds in 3. Assume each works continuously (with equal coffee refueling breaks), except for available rest periods.

  
  For 15 stalls, each working on their own stalls, Susan will finish five in the time it takes Sister to finish 10 (stalls being whole numbers) and Sister will be able to rest for one minute between stalls. The entire stable takes 100 minutes.

  
  For the same number of stalls, each working sequentially on their own chore, each stall will take the longer of the two tasks (6 minutes) except for the first and last stalls which because of the sequential nature of the chores will take 11 minutes. The shorter length of Susan’s task allows her to rest for one minute between stalls and for 6 minutes at the beginning (unless she makes the coffee to keep them both going), while Sister gets to rest for the five minutes it takes Susan to bed the last stall. The entire stable takes 13x6 minutes plus 11 minutes each for the first and last stalls, or 100 minutes.

  
  The only difference is that working independently on their own stalls, Sister gets to rest for one minute between stalls while finishing twice as many as Susan. Working on their own chores, Susan gets to rest for one minute between stalls and for six minutes at the beginning, and Sister gets to rest for five minutes at the end.

  
  Perhaps Sister – as the better skilled person - was showing the trait of generosity that is often observed among those who are in a position to be generous by allowing the lesser skilled person to rest more often. Regardless, even though the stable doesn’t get cleaned faster, the division of labor scenario still favors the lesser skilled person with more resting time.

  Published: December 23, 2007 10:20 PM

• Joseph Huang

  hello Bill VA,

  if they are working independently, there is no reason for Sister to rest unless tired. similarly, if they are working with division of labor, Sister can move on to the next stall while Susan beds down the previous stall, so there is no down time for either except for the beginning and the end. there is no need for Sister to wait for Susan before starting the next stall. what you have done is unnecessarily added break times between each and every "unit" of stalls, which is why you come out with the same number of minutes.

  also, your post contains rounding errors. you can only round at the end of computation, because if you round at the beginning any rounding errors will be compounded.

  i think your method of measurement is a bit misleading, also. what matters is the total amount of labor expended, altho some is expended when idle, it certainly is not the same as the amount of effort expended while working.

  in short, your post fails in many ways.

  now for the numbers
  

  
  
  S1 = Susan
  
  S2 = Sister
  
  S1S = # of stalls that Susan does
  
  S2S = # of stalls that Sister does

  working independently:
  S1 time per stall = 20m
  S2 time per stall = 9m

  total labor time = 20 * S1S + 9 * S2S = 29 * (S1S + S2S)

  total number of stalls = S1S + S2S = 15

  plugging in, total labor time = 29 * 15 = 435 minutes

  under specialization,
  S1 time per stall = 5
  S2 time per stall = 6

  total labor time = 11 * 15 = 165 minutes

  note that i did not count "idle" time, but it would definitely not eliminate the gargantuan gap between the two methods.

  Published: December 26, 2007 7:51 AM

• Kip Watson

  The Industrial Revolution wasn't so bad because it worked out all right in the end...?

  This is a variation on the 'Black Death was good' theory -- ie. that the Black Death was good because there was more prosperity left over for those who survived it.

  Tough luck if you're one of those who dies in misery in the Black Death/Industrial Revolution/Slavery/Nazi Death Camps/Libertarian Utopian World. But it's OK! As you expire you can console yourself with the thought that the rest of us will be better off...

  Published: December 29, 2007 5:23 AM

• Inquisitor

  So the Industrial Revolution didn't improve situations? Oh wait, it did. Was it ideal? No, because the preceding political arrangements were a mess. Too bad statists cannot grasp these fine points. Read Hayek on this, and don't bombard us with strawmen that those ignorant of Austrianism are so keen on deploying. Judging from your site though, I doubt you have any interest in genuine argumentation.

  Published: December 29, 2007 8:01 AM

• Inquisitor

  It's cute, BTW, how the Industrial Revolution is likened to a plague.

  Published: December 29, 2007 8:10 AM

• P.M.Lawrence

  "So the Industrial Revolution didn't improve situations? Oh wait, it did."

  Only for some people; it made losers out of others. The thing is, the Industrial Revolution was a zero sum game for food supplies until at least the 1830s (if you count the mechanical reaper) and maybe the 1880s (when artificial fertiliser came in, if you don't count the mechanical reaper because emigration could have provided peasant reapers - it's an accounting issue). Since people were working at the edge of food insufficiency, the Industrial Revolution didn't improve situations net. There were improvements in food supplies in this period, e.g. from opening up new lands and importing sugar etc., but these had nothing to do with the Industrial Revolution.

  Published: December 29, 2007 4:58 PM

• fundamentalist

  PM: "Only for some people; it made losers out of others. The thing is, the Industrial Revolution was a zero sum game for food supplies until at least the 1830s..."

  Who were the losers in the industrial revolution?

  Published: December 29, 2007 5:19 PM

• Inquisitor

  I echo Fundamentalist's question. It is true that the Industrial Revolution was by no means 'pure' in its inception (as Carson has argued), but to deny its benefits and liken it to a plague seems idiotic to me.

  Published: December 29, 2007 6:06 PM

• newson

  to pm lawrence:
  the fact that the industrial revolution saw dramatic population growth without the famine that had always historically followed demographic explosions (malthus) is sufficient to count the industrial revolution as an enormous success.

  of course if population growth only matches economic growth, per capita income remains stable. if human life has value, then decreased mortality with static living conditions is a clear win.

  Published: December 29, 2007 6:28 PM

• Kip Watson

  If I kill you and all your family and steal all your stuff, the remaining members of our two families will much better off afterwards!

  It never works to use utilitarianism as basis for morality. It is the crudest, most illogical sort of fallacy to argue that something is good if the measure of their goodness is the average benefit to mankind afterwards -- all kinds of moral abominations can be justified that way.

  The Industrial Revolution was decades of pure misery for the working class who endured it -- or were maimed or killed by it.

  That -- on average over the whole of society -- it worked out in the end is immaterial. It is and was immoral to sacrifice the life of one person for another person's (or one's own) well-being. As I said, one might as well argue that the Black Death was good*, since on average people (the survivors that is) were better off afterwards.

  (* as some economists do by the way -- the stupid ones...)

  Published: December 30, 2007 1:05 AM

• TLWP Sam

  The only way out of the Utilitarianist conumdrum is to say that you look after yourself and your nearest and dearest and let everyone else take care of themselves, perhaps? Or likewise it doesn't matter what the outcome of the Plague and the Industrial Revolution were rather as to who committed crimes and who didn't?

  Published: December 30, 2007 4:29 AM

• P.M.Lawrence

  Fundamentalist, the losers in the Industrial Revolution were the people within England who didn't get new opportunities (typically the older generation - see Disraeli's Sybil for a word picture), poor people in France after England repealed the Corn Laws and France started exporting food until it in turn industrialised (moving everything along one, in a sequence that ended after new lands started supplying food - which they could have done in the first place, if politics had arranged emigration), and so on.

  Inquisitor, that wasn't my position. I was pointing out that there were losers as well as gainers, costs as well as benefits - and that it was close to zero sum considered in food security terms, which was the most relevant criterion at the time.

  Newson, your reasoning is "post hoc ergo propter hoc", after this therefore because of this. I already pointed out that other effects were operating to increase food supplies at the time. In fact, the population increases kept taking up nearly all the slack generated until after the Industrial Revolution, which kept food security the most relevant criterion during that period. The Industrial Revolution didn't harm food security either - but it didn't do any good. All the population increase shows is that the non-industrial gains in land productivity and total available land had been and still were working.

  Read the discussion in Nassau Senior's work on wages. For completeness he did cover one way in which industrialisation could cause harm, though it didn't apply in practice. Ironically, it could matter quite soon; it's a consequence of diverting food production capacity to making biofuels (though they didn't have that term then).

  Published: December 30, 2007 5:55 AM

• Inquisitor

  Kip, you have still offered no proof whatsoever, just slurred economists who argue contrary to your assertions. The move from a terrible system to a better one was hard - should it be painted as some horrific tragedy that it was made? I've not met anyone here who has painted the period of the Industrial Revolution as some idyllic paradise - merely a transition from worse to better, even if far from ideal. We do not deny that it is not a phenomenon stemming from free exchange (see Carson on this: http://www.mutualist.org/id4.html).

  Published: December 30, 2007 6:54 AM

• Kip Watson

  Inquisitor,

  You need proof of the misery of the Industrial Revolution!!?

  Right thinking minds were universally appalled then and remain appalled now by the dire suffering of so many millions during that period. The universal memory of Western Civilisation is seared with the agony of it. (well, perhaps not in all neighborhoods.)

  Not to mention (as I didn't before), that the unspeakable misery of that period was a direct cause of Communism nearly taking over the world.

  But, in some quarters this entirely unnecessary suffering was all acceptable as it made technological and scientific advancement proceed with a marginal increase in efficiency.

  Sure, no one cares -- all those poor proles are dead, why should we care? Except that our Libertarian wannabe-elites see nothing wrong with millions of 'invisible' people suffering in the here-and-now for their luxuries and/or their ridiculous theories (I don't know which is worse).
  

  Published: December 30, 2007 7:10 AM

• Inquisitor

  It seems you're not interested in genuine argument - just tossing around straw men and mischaracterizations of libertarians. You continue to miss my point - where did I say the Industrial Revolution was devoid of misery and was idyllic? How is the Industrial Revolution, though, NOT an improvement over the previous system? It definitely made life better, not worse, for most (see Hayek in Capitalism and the Historians on this.) Also, spare me the meretricious appeals to authority - most 'right thinking minds' you speak of failed to fully grasp the extent and features of the phenomenon.

  Act like a troll, and you'll be treated accordingly.

  Published: December 30, 2007 8:16 AM

• fundamentalist

  PM: "the losers in the Industrial Revolution were the people within England who didn't get new opportunities (typically the older generation - see Disraeli's Sybil for a word picture), poor people in France after England repealed the Corn Laws..."

  Not getting an opportunity doesn't make you a loser because you're no worse off than before. You just missed an opportunity, and the fault could be your own. As for the older generation, in what way did the industrialization of England harm them? And concerning the poor in France who didn't have corn to eat because French owners exported it, could that have something to do with state intervention in the market and not the industrialization of England?

  Kip: "Right thinking minds were universally appalled then and remain appalled now by the dire suffering of so many millions during that period. The universal memory of Western Civilisation is seared with the agony of it."

  By "right thinking minds" I assume you mean socialists. Socialism existed long before the industrialization of England, but it fell on deaf ears for generations. Socialists in England during the industrial revolution decided to portray the working conditions of the poor in the worst possible light in order to stir up anger against the owners of capital.

  Measured against the lifestyles of the upper classes, the conditions of working people were horrible. And most of the writers who portrayed the conditions of the working class were from the upper classes, such as Disraeli, Marx, Engels and Dickens. Dickens was born into a fairly wealthy family and then went into foster care after his father lost all of their money. But are the upper classes the proper measure, or should we not measure the conditions of workers during the industrial revolution with their conditions before, which none of those writer did? Also, is it even remotely possible that those writers exaggerated for effect? Or took extreme examples and portrayed them as the norm?

  Few people ask why workers endured such horrible working conditions. Why didn't they go back to farm life in the country, which most writers of the day described as idyllic? Were they just stupid? No, work in the "horrible" factories offered them a much better life than did working on a farm where they were certain to starve. Did children work in factories? Of course! But they also worked on the farm from sunrise to sunset for far less money. Children have always been a source of labor on farms, and still are today on family farms.

  Besides the logical argument that workers in the industrial revolution weren't stupid, there's the historical evidence that wages for workers increased dramatically and steadily during the industrial revolution and as a result of the revolution. But socialists never let good facts get in their way; fiction is a much better guide to reality for them.

  Published: December 30, 2007 8:25 AM

• TLWP Sam

  Trying to have it both ways or something, Kip? You denounce Utilitarianism at one point then complain about the average schmoe's lot in life during the Industrial Revolution. Suppose that the average condition were worse during the Industrial Revolution than before, how is this a problem unless you are a Utilitarianist? Who knows? Maybe 'creative destruction' involves people too? Complaining that the Industrial Revolution shouldn't have went ahead because of the plight of some would be a Utilitarian argument for the people of the day.

  Published: December 30, 2007 10:20 AM

• Kip Watson

  OK -- I apologise for getting emotional. As a descendant of the 19th Century English working class I have the same gut reaction to those who try and justify the horrors of this period as any descendant of a mistreated class or race.

  I'll also readily grant (as I already stated) that the state of society at the close of the 19th Century was a considerable improvement over the beginning. But this improvement was a result of several things: science and technology, for example the great public works of time (especially sanitation); and political and social advances, including suffrage, trade unions and the first great steps in a national welfare system.

  In a peverse way, these were brought about by Laissez Faire, as it was the horrors of this period -- especially the early decades -- that necessitated and motivated these efforts. There is a notable faction of libertarians who see Laissez Faire itself as the cause of man's betterment, which is like praising a disease and ignoring the treatment that cured it.

  It's true that factory production also improved people's lives, but this needs to be understood as technological factor. The cruel factory conditions and dire urban conditions were wrong and unnecessary. This was understood at the time, but attempts to improve them were staunchly opposed by the Laissez Faire.

  It's also true that the rural poor, who were very poor, were attracted to the cities (as the poor of the developing world are still) hoping for a better life and relief from the vagaries of rural life (remembering the world was still in the depths of the Little Ice Age, which most affected those on the land). Some of them found that better life, but millions of others found themselves trapped in nightmare world of poverty and lawlessness; of filth, squalor and contamination; of pollution and poisoning; of child labor and the workhouse; where death or mutilation at work was common and welfare non-existent; where beggars were everywhere; where prostitution and child prostitution occurred at a level unimaginable in our time. The London and Manchester of Charles Dickens were not an invention.

  These people were poor and powerless before they moved to the city, but to argue that justified such mistreatment, neglect and abuse is an argument no enlightened person should ever make. And the remark that 'if they were unhappy they could have gone back to the countryside' would not have been out of place on the lips of a callous member of the 19th Century ruling classes.

  The first point I made still stands. It is immoral to sacrifice the life of one person to improve the lot of another. But I don't expect to change your minds. Anyone who can mischaracterise opponents of these pointless horrors as a Socialist* is probably impervious to reason.

  
  (* Actually in early 19th Century terms I am -- as are most people of both Left and RIght -- as the word meant something very different before Marx. In 21st Century terms I am pure Conservative.)
  

  Published: December 30, 2007 4:25 PM

• fundamentalist

  Kip: "It's true that factory production also improved people's lives, but this needs to be understood as technological factor."

  Technological advances rarely happen without capitalism. Take the USSR, for example. They had brilliant scientists but their inventions rarely improved the lives of the people because their implementation rarely becamae widespread. As for scientific advancement, sufficient evidence exists to show that science didn't have economic benefits until well into the 20th century. Almost all of the technological advances made before then came from mechanics and tinkerers who were simply trying to improve the way machines worked. For example, the steam engine was probably the most important invention of the industrial revolution. Its inventor was simply trying to find a way to get more air into mine shafts for the miners.

  Kip: "The cruel factory conditions and dire urban conditions were wrong and unnecessary."

  Cruel compared to what? As I wrote above, the critics of the factory system were comparing it to an ideal situation, not reality. Can you point to a factory system in the world at the time that was better? You should keep in mind that the factory system of the day was fairly new, but it built upon the limited manufacturing model that existed before, mostly in the home, and replicated those conditions.

  Have you ever wondered why no body of literature comparable to that of the socialists of the 19th century ever existed before the industrial revolution? Were major novels written in 18th century that criticized the conditions of the working classes? I'm not a literature specialist but I don't recall any similar writings. Was that because life before the industrial revolution was so wonderful for the working class? That's definately not true. So either the upper classes who wrote about the working class suddenly developed a conscience, or they had become socialists and wanted to promote their new faith.

  The real crime of England happened before the industrial revolution with the enclosure of common village land by the nobility. That was pure theft by the nobility, but the British sanitize it by calling it the enclosure movement. The enclosures pushed thousands of poor peasants off their lands who migrated to the cities to beg or perform menial labor. The new factory system of the industrial revolution took those victims of the aristocracy in and gave them wages to make a decent living for the period. Then, to add to their crimes, the aristocracy turned on the factory system which was merely helping the people the aristocracy had robbed.

  Kip: "It is immoral to sacrifice the life of one person to improve the lot of another."

  No one disagrees with you on that. What we disagree with is that if you measure the factory system fairly, by the standards of the day and not by socialist idealistic nonsense, or aristocratic guilt, then the factory system was not cruel and did not sacrifice lives but enhanced lives by providing good work for an honest wage.

  You would know all of this if you would read some non-fiction about the period. Fiction can be very misleading because it has to exaggerate evil in order to make a good story.

  Published: December 30, 2007 5:15 PM

• Inquisitor

  Have you actually read Hayek to see what classical liberals/libertarians have to say on the matter? Or are you just evoking the myths spawned by 'right minded thinkers' of the time? Also, how exactly does technology expand without capital investment? Technology is not some magic entity that crops up out of nowhere. Laissez-faire is indeed what contributes to the betterment of society. Libertarians will most certainly defend this truth. Note that this does not mean a full endorsement of the Industrial Revolution, given that it was hardly pure laissez-faire, and was preceded by far worse economic systems, as Fundamentalist has already noted.

  Published: December 30, 2007 5:35 PM

• Michael Smith

  No factory owner in England (or in any western nation) had the power to FORCE anyone -- children or adults -- to work in his factory. Those that chose to work there did so because it was the best alternative available at the time.

  Capitalism didn't create poverty; it inherited it from the feudal system that preceeded it.

  Published: December 30, 2007 5:58 PM

• P.M.Lawrence

  Fundamentalist, you're getting hold of the wrong end of the stick, sometimes even the wrong stick entirely, in a couple of your more recent posts. So please bear with me, it'll take a little time to get through.

  "Not getting an opportunity doesn't make you a loser because you're no worse off than before." It was zero sum, remember? Creating new opportunities intrinsically involved removing old ones. It did make people worse off than before.

  "You just missed an opportunity, and the fault could be your own." Well, that is a digression, since it's not the question of fault so much as whether somebody was going to be a loser. But that was actually the philosophy of consolation for the winners, since they could always blam the losers themselves - right up until the plight of the weavers once weaving was mechanised and brought into the factories. The thing is, for nearly a generation the hand weavers had prospered under the Industrial Revolution, since that had made yarn cheaper and more plentiful. They throve and were thrifty, ploughing their profits back into their businesses and going to Church and in general doing just what the gainers saw as virtuous. Then it all went wrong, and it was too awkward for people to maintain that self-deception any more - they knew the facts directly. Either they hardened their hearts in full knowledge or they looked on helplessly. Only we can return to that false comfort at this remove of time.

  "As for the older generation, in what way did the industrialization of England harm them?" Same as above. You can see it working out in the background in Sybil; it was the young who were preferentially offered new roles.

  "And concerning the poor in France who didn't have corn to eat because French owners exported it, could that have something to do with state intervention in the market and not the industrialization of England?" Short answer, no. Long answer, it was the reduction of state intervention that improved matters for England, as you would expect, only it moved the problem along one to another country. But I already told you all this.

  'Few people ask why workers endured such horrible working conditions. Why didn't they go back to farm life in the country, which most writers of the day described as idyllic? Were they just stupid? No, work in the "horrible" factories offered them a much better life than did working on a farm where they were certain to starve.' Oh dear, this again. Of course they were certain to starve - once all the food was being shipped to the factory workers. It's the zero sum thing again. Plus, of course, they often weren't on the farm any more anyway - the agricultural resources they had formerly had access to were busily being takien out from under them. For instance, Scottish factories were filled because the crofters had been cleared. There's a natural experiment to show how they did in fact stay out of the factory if they still had the old ways available: the fish processing factory at Leverburgh (look it up).

  'Did children work in factories? Of course! But they also worked on the farm from sunrise to sunset for far less money. Children have always been a source of labor on farms, and still are today on family farms.' Only in high season, and of course they were in more of a subsistence economy. They didn't need the money to live.

  'Besides the logical argument that workers in the industrial revolution weren't stupid, there's the historical evidence that wages for workers increased dramatically and steadily during the industrial revolution and as a result of the revolution.' You really ought to read Nassau Senior on Wages. You're talking about nominal wages, i.e. as denominated in units of cash. What counts is how much buying power they had, net after necessities; not only did board and lodging have to be bought in the town, prices of other things were higher there too. That net buying power first fell, then rose - but probably not as far back as early 17th century levels, though probably better than mid 18th century levels.

  "The real crime of England happened before the industrial revolution with the enclosure of common village land by the nobility. That was pure theft by the nobility, but the British sanitize it by calling it the enclosure movement. The enclosures pushed thousands of poor peasants off their lands who migrated to the cities to beg or perform menial labor." Roughly correct, but...

  ... "The new factory system of the industrial revolution took those victims of the aristocracy in and gave them wages to make a decent living for the period." This wasn't independent. Zero sum, remember? The first round of enclosures, way back in the 16th century, drove out peasants to free up land for sheep, which were valuable because of the wool export market that became realistic then. But this second round was to grow surplus food for cash sale; it was added to by the demand from the new industrial workers.

  "Then, to add to their crimes, the aristocracy turned on the factory system which was merely helping the people the aristocracy had robbed." They didn't, actually. They often put up capital for it, and they did their best to prevent food imports so they could keep getting the workers' recycled pay.

  "...the factory system was not cruel and did not sacrifice lives but enhanced lives by providing good work for an honest wage." Um, wasn't there someone popular around here who made a big deal about "things not seen"? Zero sum means that it provides some people with those things, only somewhere else where you can't see, others are going without because of it.

  Published: December 30, 2007 9:40 PM

• Kip Watson

  Some fundamental logical errors:

  1) You conflate capitalism with Laissez Faire / libertarianism. This is grossly unfair to capitalism, you might as well conflate sex with rape.

  2) You assume that because technological and social advancement (eventually) occurred simultaneously with libertarian economics therefore the former needed or was caused by the latter, when in fact the latter grossly impeded and retarded the former.

  3) It's true that the mistreatment of the rural poor in the 18th Century was a major factor in their immiseration. The same class, same philosophies and same heartless attitudes as Laissez Faire. All part and parcel of the same wrong.

  4) The crimes of this class go beyond the horrors of the Industrial Revolution -- they extend to the Opium Wars (crimes almost equivalent to Nazism and Communism) and, as is difficult to refute, led directly to Marxism and Communism. Without the huge pool of human suffering Laissez Faire produced, Marxism could never have prevailed over nearly half of mankind.

  Had I no experience of the libertarian mindset, I would be astonished that any intelligent person could defend Laissez Faire, but sadly tweedledee-libertarianism is as blind to history and empirical fact as its tweedledum-twin, Marxism.
  

  Published: December 30, 2007 9:42 PM

• Black Bloke

  The only reply Kip Watson deserves is derision for his foolishness (as is clearly evidenced by his ignorant ramblings at his site and this site) or a patronizing pat on the head.

  Published: December 30, 2007 9:59 PM

• IMHO

  Inquisitor,

  "I've not met anyone here who has painted the period of the Industrial Revolution as some idyllic paradise - merely a transition from worse to better, even if far from ideal."

  I have found that people are unable to wrap their heads around the fact that getting from "here" to "there" is not as easy as throwing a switch. Sometimes the only choices life gives you are "unfair" and "less unfair". If you keep at it, things may very well improve; but if you give up, then life will less that what it could be.

  Published: December 31, 2007 1:32 AM

• IMHO

  Sorry,

  Correction...then life will be less than what it could be. :)

  Published: December 31, 2007 1:34 AM

• newson

  to pm lawrence:
  "The pre-factory age was not a time of happy, contented kids. From 1730 to 1740, 75 percent of children in England died before age five. From 1810 to 1829, supposedly the evil age of the factory, infant mortality fell to 32 percent and would continue to drop. Capitalism and the industrial revolution gave youngsters a chance to survive.

  Nassau Senior, one of the great British economists of the mid-1800s, noted that most of the agitation for the anti-child labor Factory Acts came not from humanitarians, but from organizations of adults who wanted more textile work for themselves. 'They got up therefore a frightful, and (as far as we have heard and seen) an utterly unfounded picture of the ill treatment of the children,' Senior wrote"

  i lifted this from "the free market" volume 14, number 9, september 1996.

  as for "post hoc ergo propter hoc", not me! i deliberately gave no timeframe for the industrial revolution for the very reason it's an open question. now if you want me to pin dates down in a crude way, i'd say the late 18th century saw the entry of mechanization into the textile industry; mid 19th century, the steam engine; and later that century, electricity.

  please note, i did not exclude land reforms from contributing to welfare improvements so i don't want to dispute lag-times.
  whilst you mentioned lingering food insufficiency, you've not tallied that into the increasing population aspect, which is the primary point i was conveying.

  i haven't read nassau senior, but i liked the snippet above, and thank you for the pointer.

  Published: December 31, 2007 2:21 AM

• Michael Smith

  P.M. Lawrence:

  Where is your proof that the industrial revolution was a "zero sum" situation? You've made that assertion repeatedly -- but I've not seen you produce any evidence to support it.

  What you've offered to support your assertions are simply more vacuous assertions. Such as when you wrote this:

  
  (em)Fundamentalist, the losers in the Industrial Revolution were the people within England who didn't get new opportunities (typically the older generation - see Disraeli's Sybil for a word picture), poor people in France after England repealed the Corn Laws and France started exporting food until it in turn industrialised (moving everything along one, in a sequence that ended after new lands started supplying food - which they could have done in the first place, if politics had arranged emigration), and so on.(/em)

  People who "didn't get new opportunities"? Let's examine exactly what that means.

  To prove your claim that the industrial revolution was a "zero sum" situation, you must show the following:

  1) That these "new opportunities" existed prior to the industrial revolution;

  2) That these "new opportunities" were the legitimate property of some individuals prior to the industrial revolution;

  And:

  3) That the industrial revolution consisted of other individuals stealing these "new opportunities" from their rightful owners and transferring them to some third party.

  Please proceed to show us how that was the case.

  Published: December 31, 2007 7:04 AM

• Michael Smith

  Kip Watson:

  You evade the fact that under laissez faire capitalism, no private individual has the power to initiate force against others. They have no power to "produce a huge pool of human suffering".

  Published: December 31, 2007 7:15 AM

• Inquisitor

  Some fundamental logical errors:

  "1) You conflate capitalism with Laissez Faire / libertarianism. This is grossly unfair to capitalism, you might as well conflate sex with rape."

  Trolling, much?

  "2) You assume that because technological and social advancement (eventually) occurred simultaneously with libertarian economics therefore the former needed or was caused by the latter, when in fact the latter grossly impeded and retarded the former."

  No, we're not assuming anything of the sort. We're correctly stating that capital must be accumulated to implement technological advances, on any wide scale. You've done nothing to refute Fundamentalist, nor have you presented a well-grounded theory to refute our position.

  "3) It's true that the mistreatment of the rural poor in the 18th Century was a major factor in their immiseration. The same class, same philosophies and same heartless attitudes as Laissez Faire. All part and parcel of the same wrong."

  Bullshit.

  "4) The crimes of this class go beyond the horrors of the Industrial Revolution -- they extend to the Opium Wars (crimes almost equivalent to Nazism and Communism) and, as is difficult to refute, led directly to Marxism and Communism. Without the huge pool of human suffering Laissez Faire produced, Marxism could never have prevailed over nearly half of mankind."

  Bullshit piled upon bullshit.

  "Had I no experience of the libertarian mindset, I could be astonished that any intelligent person could defend Laissez Faire, but sadly tweedledee-libertarianism is as blind to history and empirical fact as its tweedledum-twin, Marxism."

  You have none. You are trolling, horribly ignorant or both. You deserve no further attention.

  Published: December 31, 2007 12:12 PM

• fundamentalist

  PM:"It was zero sum, remember? Creating new opportunities intrinsically involved removing old ones. It did make people worse off than before."

  As others have pointed out, this is the flaw in you analysis. New technologies can be zero sum for society as a whole or growth in standards of living would be impossible. Only in the very limited sense than new technologies displace old ones can you say that they are zero sum, and then only for the short run. For all of society, new technologies improve wages and the standard of living by reducing costs. And while, harming the producers who still use the old technology in the short run, it benefits them in the long by providing more opportunities, especially if they switch to the new technologies.

  PM: "it was the reduction of state intervention that improved matters for England, as you would expect, only it moved the problem along one to another country."

  I meant state intervention in France. Greater demand in England would raise the price of corn in France, which would cause farmers to plant more and the price to fall again. The poor in France would have to switch to another grain (usually the poor ate barley) until the price of corn fell again. But this process would not happen under the highly regulated French system.

  PM: "Of course they were certain to starve - once all the food was being shipped to the factory workers."

  If they returned to farming, couldn't they eat what they grew? They wouldn't have to ship everything they grew to the cities.

  Kip: "You conflate capitalism with Laissez Faire / libertarianism."

  Exactly!

  Kip: "This is grossly unfair to capitalism, you might as well conflate sex with rape."

  Don't see how that follows, though. There's a major leap in your logic.

  Kip: "You assume that because technological and social advancement (eventually) occurred simultaneously with libertarian economics therefore the former needed or was caused by the latter, when in fact the latter grossly impeded and retarded the former."

  You seem to think that all social advancement happens only through legislation. That's not the case. Most social advancement such as higher wages and better working conditions took place as part of the free market process in which manufacturers competed for better workers. Legislation often lagged behind improvement in working conditions in factories and mines.

  Kip: "The same class, same philosophies and same heartless attitudes as Laissez Faire."

  Typical of socialists. They all believe that they can discern the thoughts and intentions of the heart, as if they're gods. Odd thing is that socialists all have good intentions and capitalists evil ones. Funny how that comes out the same every time.

  Kip: "Without the huge pool of human suffering Laissez Faire produced, Marxism could never have prevailed over nearly half of mankind."

  The historical evidence that laissez faire improved the lives of everyone is overwhelming. The fact that a lot of people followed Marxism doesn't prove anything. That's a logical fallacy typical of socialists. The number of people who believe something to be true has nothing to do with whether it's true or not.

  Clearly you credit social legislation with improving the working conditions in England in the 19th century, but to what do you attribute the enormous increases in wages over the century? Surely not to legislation.

  Published: December 31, 2007 1:38 PM

• newson

  kip:
  "the Black Death was good*, since on average people (the survivors that is) were better off afterwards."

  of course this is arrant nonsense, but you have shown us that you do have one true insight: prosperity is determined by the ratio between capital stock and labour, not by unions, nor by state intervention.

  the enormous drop in the workforce, post-plague, increased the capital stock/labour ratio. more competition for labour resulted in steep wage rises. nb: the english government actually introduced legislation to freeze wages at the pre-plague levels (ordinance of laborers, 1349). hard to see how fighting workers' payrises meshes with your "right minded people".

  nevertheless, we should be grateful to you for bringing a perfect example of the futility of minimum wage provisions in raising per-capita income.

  a happy and prosperous 2008 to you!

  Published: December 31, 2007 5:55 PM

• P.M.Lawrence

  Newson, your quotation is accurate apart from "Capitalism and the industrial revolution gave youngsters a chance to survive", which is another post hoc ergo propter hoc. At any given date, mortality, including child mortality, was greater in the towns than in the country. There were indeed improvements, but these do not flow from capitalism and/or the industrial revolution at all, but to better sanitation and such (which also did not flow from those).

  It is quite correct to say that child labour wasn't as bad as made out in factories, etc. (Disraeli's Sybil describes their light work in the mines, opening and closing ventilation shafts at the beginning and end of shifts). But what I was trying to bring out was that farm child labour wasn't horrendous either. There is no contradiction here.

  The original post hoc ergo propter hoc that you made, that I first referred to, was "the fact that the industrial revolution saw dramatic population growth without the famine that had always historically followed demographic explosions (malthus) is sufficient to count the industrial revolution as an enormous success".

  Sure, various things did increase food supply during the period, but we don't need to go into the causes to be able to deduce things from that. In particular, we can see that Nassau Senior was quite right to consider that what counted was the buying power of cash and kind wages in terms of food, not the nominal amount (rural work had a lot of subsistence in kind). These days we aren't up against the stops in quite that way in the developed world, but it's the right measure for that period.

  Michael Smith, you claim not to have seen me produce any evidence that the Industrial Revolution was zero sum for food supplies (you left that very important part out). Here's a quotation from where I did just that: "...until at least the 1830s (if you count the mechanical reaper) and maybe the 1880s (when artificial fertiliser came in, if you don't count the mechanical reaper because emigration could have provided peasant reapers - it's an accounting issue)"; I named the first results of the Industrial Revolution that affected the food productivity of land.

  I also referred people to a contemporary analysis of the effects of mechanisation on food supply (in those days people were concerned that the Industrial Revolution might reduce wages), stating the relevant part: "Read the discussion in Nassau Senior's work on wages. For completeness he did cover one way in which industrialisation could cause harm, though it didn't apply in practice. Ironically, it could matter quite soon; it's a consequence of diverting food production capacity to making biofuels (though they didn't have that term then)."

  "What you've offered to support your assertions are simply more vacuous assertions. Such as when you wrote this...", no - that was to illustrate, not to support. It was a reply to a question asking who, not why.

  'People who "didn't get new opportunities"? Let's examine exactly what that means. To prove your claim that the industrial revolution was a "zero sum" situation, you must show the following [points being challenged.] Please proceed to show us how that was the case.'

  Basically, that's nonsense. The points asked would not prove what I asserted even if they could be shown. As it happens, they aren't true, but since nthey have nothing to do with anything it doesn't matter.

  What does show that the early parts of the Industrial Revolution were zero sum for food supplies is, the developments were things like the Spinning Jenny, steam power, railways, etc. Not one of these either created more food per unit land directly, or in any way assisted it to increase, or brought more land into production that reached the workers affected by the Industrial Revolution. Not even steam boats opening up the Mississippi did that before the earliest cut off date I gave.

  Fundamentalist you left out for food supplies in the following: "As others have pointed out, this is the flaw in you analysis. New technologies can be zero sum for society as a whole or growth in standards of living would be impossible. Only in the very limited sense than new technologies displace old ones can you say that they are zero sum, and then only for the short run. For all of society, new technologies improve wages and the standard of living by reducing costs. And while, harming the producers who still use the old technology in the short run, it benefits them in the long by providing more opportunities, especially if they switch to the new technologies."

  So, the above totally misses the point, which was that it only moved food from mouth to mouth. It's not even a matter of "...harming the producers who still use the old technology in the short run..."; people who got harmed by the plight of the weavers (say) weren't those who kept using the old ways (average wages for remaining hand weavers went up throughout, from survivor bias). It was the people who got squeezed out who suffered.

  "I meant state intervention in France. Greater demand in England would raise the price of corn in France, which would cause farmers to plant more and the price to fall again. The poor in France would have to switch to another grain (usually the poor ate barley) until the price of corn fell again. But this process would not happen under the highly regulated French system." But, in the short term, they couldn't "plant more"; there were neither enough peasants nor enough cleared land. What actually happened - faster than changes in French agriculture could occur - were changes to French industry, so that everything moved one country further along. The only relevant "state regulation" was, property rights for French peasant families. These were quite material, but really only kept rural poverty from developing instead.

  "If they returned to farming, couldn't they eat what they grew? They wouldn't have to ship everything they grew to the cities." We're not talking about people squeezed off the land so much, in the French case. Their ancestors had been, under the Ancien Regime, or had been turned out of work as servants when that fell, but after Napoleon's reforms the peasants in place in France were protected far better than in Britain (except against the crop failures of the 1840s, etc.). So, the poor of the Les Miserables sort didn't have farms anyway. That is the stop food production was up against; land could not be brought into production fast enough to supply needs that were increasing even faster. The French did try emigration, of course, to take someone else's land in North Africa, but that took time and wealth to obtain too.

  Published: January 1, 2008 12:22 AM

• newson

  pm lawrence:
  "There were indeed improvements, but these do not flow from capitalism and/or the industrial revolution at all, but to better sanitation and such (which also did not flow from those)."

  you seem quite happy to link specific developments to particular outcomes, whereas i feel there are numerous contemporaneous factors at work. much of the technology that made the implementation of large scale potable water and sewage systems possible had been developed in other industries (insights in piping had come from the gas piping field, pumping technology had been pionered elsewhere.)
  the massive public works programmes initiated by central and municipal governments (this is what i assume you're referring to) were only possible thanks to the increasing tax revenues that industrialization generated.

  the victorian era saw a huge building spree of public orphanages, school, prisons, and hospitals. were it not for the massive wealth increase over the 19th century, nothing of this scale would have been possible.
  in this same period, there sprung up numerous voluntary associations dedicated to public health, again, philanthropy made possible only by the builing of enormous fortunes.

  i'm flogging a dead horse here, but the constant improvements in longevity, which have continued to this very day, are only attributable to industrialization. if you agree with that, then it's only a discussion as to lag times for the industrial revolution's wealth effect to kick in for the less fortunate.

  
  

  Published: January 1, 2008 4:50 AM

• fundamentalist

  PM: "There were indeed improvements, but these do not flow from capitalism and/or the industrial revolution at all, but to better sanitation and such (which also did not flow from those)."

  It's not post hoc ergo propter hoc if a true relationship existed, and one did. You and Kip want to restrict the benefits of industrialization to just a few guys getting rich. But that's not historical. Wages increased and enlarged the middle class. Greater wealth causes enables people to afford better sanitation. Social improvements aren't free. A direct correlation exists between social improvements and wealth. All one has to do is look at current and former socialist nations, where the government tried to improve social conditions without the required wealth, to see that. It's absolutely amazing to me that socialists haven't learned a thing from 100 years of failed socialism.

  PM: "what counted was the buying power of cash and kind wages in terms of food, not the nominal amount..."

  That is the correct measure of prosperity, but how did the famines stop if laborers couldn't buy more food than they could buy before? Famines stopped for two reasons: 1) farming methods improved dramatically and increased the yield per acre, 2) wages increased so that laborers could afford to buy the food. The first was not part of the industrial revolution, but of an agricultural revolution that paralleled it. It would have improved living standards by itself by lowering the cost of food. But the second is related in that it enlarged the market for the increased food supply as well as enabled laborers to purchase more food. It's clear that the industrial revolution did not cause the agricultural revolution of the day, but it supported it and was in no way zero sum.

  PM: "It was the people who got squeezed out who suffered."

  Who got squeezed out and how?

  PM: "But, in the short term, they couldn't "plant more"; there were neither enough peasants nor enough cleared land."

  What are you calling the short term? They could plant more the next spring. They had the fall and winter to clear more land. But more importantly, they probably didn't apply the new farming techniques that England was using.

  PM: "The only relevant "state regulation" was, property rights for French peasant families. These were quite material, but really only kept rural poverty from developing instead."

  France has always had one of the most highly regulated economies in the world, but that was especially true before and during the industrial revolution. French businessmen invented the term laissez faire, in which they begged the state to quit trying to rescue them because instead of rescuing business the state killed it.

  Published: January 1, 2008 9:33 AM

• Inquisitor

  Fundamentalist: "It's absolutely amazing to me that socialists haven't learned a thing from 100 years of failed socialism."

  PM Lawrence isn't even a socialist, and he isn't the only libertarian to be critical of the Industrial Revolution. Good post btw.

  Published: January 1, 2008 9:43 AM

• TLWP Sam

  Didn't you forget a 3) fundamentalist? Namely pesticides and insecticides appeared during this time. Now crops wouldn't be lost to pests and fertilizers could means more land could be used and with greater frequency (or conversely no land was required to remain fallow).

  Published: January 1, 2008 10:06 AM

• fundamentalist

  Inquisitor: "PM Lawrence isn't even a socialist..."

  A lot of people believe that a third way exists, between socialism and capitalism and he may be one. The book "Crunchy Conservatives" promoted this nonsense. But as the book showed, the "Third Way" is 95% socialism and 5% grudging acknowledgement of the benefits of capitalism. Some people call the "Third Way: communitarianism because it claims to emphasize community values over individual ones.

  But I consider such people even more dangerous than outright socialists because they mix truth and falsehood. Half-truths are always more dangerous than outright lies because they fool more people. And those people always want less capitalism, and more socialism. They prepare the way for full-blown socialism. If you visit the official web sites of socialist parties, you'll see that they admit that the "atmosphere" in the US isn't right for socialism, so they are working to change the atmosphere through small victories and incrementally bring about socialism. Communitarian types may not think they're socialists, but they prepare the way for socialism and are pawns of real socialists.

  Published: January 1, 2008 10:10 AM

• Inquisitor

  I think he's a libertarian influenced by Kevin Carson, who himself has pointed out the non-libertarian aspects of the Ind. Revolution. I'll leave this for PM to answer.

  Published: January 1, 2008 10:17 AM

• fundamentalist

  Inquisitor: "...he's a libertarian influenced by Kevin Carson..."

  So that might make him a Marxist libertarian? I read a little bit of Carson's writing but bailed when I got to the typical Marxist nonsense about theft of surplus labor.

  Published: January 1, 2008 1:53 PM

• Dave

  fundamentalist,

  I rarely post on blogs, but there are times somebody is being so thickheaded that I have to step in and ask the obvious. This is one of those times, fundamentalist; and the the obvious question, which I dearly hope others who have been following your debate are also asking, is this:

  When, at any point, in any of PML's posts has he implicitely or explicitely advocated state intervention, or or even remotely condoned it?

  This question is relevant because you just snarled around about PML being a socialist. By "socialist" I assume you mean what many people mean when they say "socialist" i.e. one who advocates state, or some sort of social control, on the free market.** If that is what you mean, it behooves you to show exactly when or where-in THIS post- PML advocated such a policy, because if you can't that means you have set up a strawman in order to attack PML with a emotional boo word.

  **Note: Pure socialism, using the standard defintion, is best described as "state control of the means of production and the distribution therof."
  

  Published: January 1, 2008 3:15 PM

• fundamentalist

  Dave: "it behooves you to show exactly when or where-in THIS post- PML advocated such a policy"

  That's a good point. And you're right PM hasn't advocated government intervention, but neither have I called him a socialist. PM has not advocated anything; he simply criticizes capitalism. I have merely pointed out that his attacks on capitalism parrot the run-of-the-mill socialist attacks. He may not be a socialist; I don't know. But he quacks just like one.

  Published: January 1, 2008 5:15 PM

• Inquisitor

  Well a lot of libertarians who are friendly towards Carson don't actually follow him to the letter. I like some of what Carson writes, but I reject his Marxist influences in economics. Others may find him even more endearing, and still yet reject this element in his economics. Apparently Carson's formulation of the LTV has left it unrecognisable when compared to the original LTV, and he makes heavy use of Austrian economics. So labelling PM a socialist merely due to opposition to aspects of the Industrial Revolution might be unwarranted, at least if I am correct.

  Published: January 1, 2008 6:00 PM

• newson

  to pm lawrence:

  i cannot see that you have refuted fundamentalist's point, that is, the absence of the industrial revolution would have seen mass starvation following the enclosure laws. that this didn't occur is surely not a "zero sum" situation, even if per-capita food intake remained essentially stable for decades.
  that some landholders also had interests in factories is hardly surprising, but so what?
  vested interests acting to suppress food imports also says nothing about the industrial revolution.

  regarding sanitation, here's a clip i found rather amusing on the roles that ale/tea may have played reducing famine in the urban slums of britain: http://www.aim-digest.com/gateway/pages/book/articles/tea.htm

  bottoms up!

  Published: January 2, 2008 1:30 AM

• P.M.Lawrence

  There's quite a lot to catch up with, now. Space and time constraints, and blogging in this heat, have forced me to state underlying reasons without going into the reasons for those before, and now people are asking me for that without going into it themselves (apart from one or two who obviously have, but clearly didn't have the chance to follow it all up themselves either). Anyway, I want to announce in advance that I'm not going to be able to clear everything up to everyone's satisfaction this time around either, for the very same reasons. But I'll give it a start, then I'll give it a rest for a few days while I get back to other stuff.

  Newson, I would have been clearer if I had written better understanding of sanitation and such. The technical improvements you describe did come along, but they weren't huge industrial improvements, just applications of well known civil engineering. They were cost effective because they were cheaper because of thos improvements, and the funds were indeed there because of Britain's increasing wealth, but they came along after the main improvements - which you obviously spotted in the timeline in the article you found and linked to. So the main improvements - ante hoc ergo non propter hoc, before this therefore not because of this - could not possibly have been caused by the Industrial Revolution. There are a couple of well known changes that the article leaves out: the reform of the tax system to make beer compete better with gin again, and the huge dietary boost that the poor got from sugar. Capitalism brought that, but on the back of slavery, not on the back of the Industrial Revolution.

  Fundamentalist, the timeline I already gave showed that the population increases started before the Industrial Revolution and then kept pace with it. I've just demonstrated it all over again in the paragraphs just above, and Newson's link supports it too.

  "You and Kip want to restrict the benefits of industrialization to just a few guys getting rich. But that's not historical." I don't want to, and never claimed that. I just said that with zero sum on food, and with food being the crucial measure at the bottom end (a few guys getting rich never hurt that unless other things were broken), the gainers at the bottom meant that there had to be losers at the bottom.

  "Wages increased and enlarged the middle class". Of course. So? The things unseen meant that there were losers too.

  "Greater wealth causes enables people to afford better sanitation". But there wasn't greater wealth in total, measured in subsistence terms, from the Industrial Revolution itself until after this period (more clothes for the hungry, of course). There was indeed greater wealth, and improvements from them, from other things that capitalism had brought (not on its own, though). Don't forget just how wealthy Britain had become during the 18th century.

  I'm going to rearrange this te get at different points in order: "That is the correct measure of prosperity, but how did the famines stop if laborers couldn't buy more food than they could buy before? Famines stopped for two reasons: 1) farming methods improved dramatically and increased the yield per acre... The first was not part of the industrial revolution, but of an agricultural revolution that paralleled it." It preceded it, actually, and there was also the sugar gain. But famines didn't actually stop until after the 1840s - things hadn't actually pulled far enough ahead by then, so bad years could still hit. It wasn't just in Ireland, if anybody was thinking of that.

  "2) wages increased so that laborers could afford to buy the food... But the second is related in that it enlarged the market for the increased food supply as well as enabled laborers to purchase more food." You haven't followed up Nassau Senior's discussion of all this. More nominal wages just bid up the prices because of the zero sum thing, until the Repeal of the Corn Laws allowed outside food to come in - but that just moved the shortage overseas, as described before. Mind you, that was still beneficial in the long run, because by the times I covered in my first description, that eventually helped open up new food production areas that didn't have the constraints (but if there hadn't been political barriers to emigration, e.g. Prussia trying to keep its taxpayers, and if the Corn Laws hadn't been there in the firstplace, and if not for the Napoleonic Wars - capitalism could have sorted it out without the Industrial Revolution improvements to farming and food transport of the 1830s).

  '"It was the people who got squeezed out who suffered." Who got squeezed out and how?' Asked and answered.

  "What are you calling the short term? They could plant more the next spring. They had the fall and winter to clear more land." You really aren't up on European conditions. We aren't talking New World pioneering, but a very slow improvement process on the highly marginal remaining land. This is the data that Malthus used; you don't have to agree with his analysis to accept it.

  TLWP Sam, there's a lot wrong with "...pesticides and insecticides appeared during this time. Now crops wouldn't be lost to pests and fertilizers could means more land could be used and with greater frequency (or conversely no land was required to remain fallow)".

  The only effective pesticides and insecticides until the 20th century were serious poisons like copper arsenate that help with rose growing but not with food. Until the late 19th century there were no artificial fertilisers; fertiliser use before then was part of the earlier agricultural imkprovements, nothing to do with the Industrial Revolution at all. (Yes, I know fertiliser was imported from guano islands in the mid 19th century; but by sailing ships which were still cheaper for bulk cargo than steam, so no Industrial Revolution connection there either.)

  "Half-truths are always more dangerous than outright lies because they fool more people" - Fundamentalist, I'm actually trying to clear away areas of ignorance and, worse, misinformation. "It's what you don't know that'll hurt you but what you do know that ain't so" [quoting Josh Billings from memory].

  Inquisitor, I'm not so much influenced by Kevin Carson as someone whose independent enquiries have come up with overlaps with his work and with that of yet others (my insights on Negative Payroll Tax match those of Professor Kim Swales, for instance). My earliest influences, starting from my own temperamental incompatibilty with a lot of the ready to wear thinking on offer, was probably partly Max Stirner and partly feudalism (the real thing, not the parody that displaced it and brought even the few free people under state control via a system of state enforced privileges; the problem with the real feudalism echoes Chesternon's Distributist complaint that the problem with capitalism was that there weren't enough capitalists - there weren't enough free feudalists).

  Incidentally, many people jump to Fundamentalist's conclusion about Kevin Carson. He diagnoses many of the same ills as Marxists (they are often right about their data, though unfortunately they select it to support the answers they want - like a lot of people). Also, he often uses their sort of jargon to explain both what he sees and what he suggests; perhaps he was frightened by a Marxist himself once, but he isn't one. Often he objects to things that those he calls Vulgar Libertarians praise, on the grounds that these things are not capitalist but just pretending to be, wolves in sheep's clothing. When people see him describe this as "actually existing capitalism", some of them just do an association of ideas thing. Some who should know better, e.g. R...

  Published: January 2, 2008 3:33 AM

• P.M.Lawrence

  I forgot one item. Newson, I did refute Fundamentalist's point that "the absence of the industrial revolution would have seen mass starvation following the enclosure laws", in '"The new factory system of the industrial revolution took those victims of the aristocracy in and gave them wages to make a decent living for the period." This wasn't independent. Zero sum, remember? The first round of enclosures, way back in the 16th century, drove out peasants to free up land for sheep, which were valuable because of the wool export market that became realistic then. But this second round was to grow surplus food for cash sale; it was added to by the demand from the new industrial workers.'

  This isn't something derived from "landholders also [having] interests in factories", it's from factory workers providing a cash market for foodstuffs. That increased the incentive for landlords to evict peasants so as to have more food to sell, whether they had factory interests or not. It's almost like Say's Law - no Industrial Revolution, and the eviction process would have choked off at lower levels that much sooner. Factory worker demand created a multiplier for evictions.

  Published: January 2, 2008 3:51 AM

• Michael Smith

  P.M.Lawrence:

  Even if your limit your claim to one item -- food -- you've still not offered any proof that food was taken from some individuals and given to others.

  All I see from you are unsupported claims, such as: "Factory worker demand created a multiplier for evictions." Why should we believe that? Because you say so?

  Your posts are full of such assertions -- where is the evidence to back them up?

  You can argue for any position in that fashion, but it proves nothing
  

  Published: January 2, 2008 7:33 AM

• fundamentalist

  PM, I think I’m beginning to understand what you mean by zero sum. It seems to be the general idea that change hurts some people and benefits others. That is true of any kind of change, even change in the weather. So yes, there were losers and winners in the industrial revolution, just as losers and winners have existed since the creation of mankind. Losers and winners appear in socialist economies, too. But that does not make the industrial revolution zero sum, because you have to add up all of the winners and losers, not just the winning and losing producers. Industrialization also benefits consumers by lowering prices and the benefits to consumers far outweigh the costs to losing producers. The sum of losses and gains in industrialization is very positive; otherwise no per capita economic growth could occur, which did occur.

  Published: January 2, 2008 8:23 AM

• P.M.Lawrence

  Michael Smith, maybe you came in late and haven't been following things. "Even if your limit your claim to one item -- food -- you've still not offered any proof that food was taken from some individuals and given to others" is answered by the part of the post I made on January 1, 2008 12:22 AM that was specifically addressed to you, when you asked that before (it would be better described as "diverted from" than "taken from", though).

  'All I see from you are unsupported claims, such as: "Factory worker demand created a multiplier for evictions." Why should we believe that? Because you say so?' Nonsense. That isn't an assertion at all, it's a summary description that came after the reasoning and evidence you have omitted. The evidence is in the parts you are leaving out.

  Fundamentalist, you are almost getting it now. "But that does not make the industrial revolution zero sum, because you have to add up all of the winners and losers, not just the winning and losing producers" is where you miss it. What you have to do is add up all the winners' and losers' consumption. The food discussion shows that this did not change in terms of the relevant measure, and it also shows that this was then the amount of food available. You can find out that amount from the production, but yes, it wasn't the fact that it was production that made it matter - it was the fact that people needed it, i.e. it was the consumption that mattered.

  "Industrialization also benefits consumers by lowering prices and the benefits to consumers far outweigh the costs to losing producers" only counts after you are clear of food constraints, and if you are willing to aggregate all consumers together, i.e. if you don't mind if some consumers go back, and if you take real wage levels into account too. But we don't even need to look beyond the first test since the early stages of the Industrial Revolution failed it. So what counted was whether some people were driven below subsistence.

  That's why "The sum of losses and gains in industrialization is very positive; otherwise no per capita economic growth could occur, which did occur" misses things. GDP is measured in nomimal terms, of the cash economy. Of course it rose once less food was provided in kind in agricultural work, off the books as it were. But "per capita economic growth" is the wrong measure for this, precisely because it also rises when people on bare survival suffer. It's something called survivor bias, e.g. New Zealand politicians proudly boast that reforms have made farmers better off. The correct comparison would have been farmers before to farmers and former farmers afterwards, not farmers before to farmers afterwards - the second comparison is using a moving target. Do you remember that I mentioned that throughout the Plight of the Weavers, average real wages for hand weavers actually rose? That's why.

  Anyhow, what actually counts for this purpose is the buying power of wages in cash and in kind before and after, per head of the population, allowing for survivor bias so that deaths make the figures worse, not better.

  Published: January 2, 2008 6:36 PM

• fundamentalist

  PM, I don't understand what you're trying to say. I recognize that you're writing in English, but it doesn't make sense to me. Are you trying to say that some people didn't benefit from the Industrial Revolution?

  Published: January 2, 2008 7:01 PM

• fundamentalist

  Curt: "The mutations are, but the selection criteria is very stringent: fitness."

  But what determines if an animal is fit or not? Random mutations. The criteria is stringent, but still randomly based.

  Published: January 2, 2008 7:04 PM

• newson

  pm lawrence:
  "The first round of enclosures, way back in the 16th century, drove out peasants to free up land for sheep, which were valuable because of the wool export market that became realistic then. But this second round was to grow surplus food for cash sale; it was added to by the demand from the new industrial workers.'

  This isn't something derived from 'landholders also [having] interests in factories', it's from factory workers providing a cash market for foodstuffs. That increased the incentive for landlords to evict peasants so as to have more food to sell,"

  first: we don't have an argument about the availability of food.
  where we do have an argument is your linking the expulsion of the peasants from the commons to the demand created by the erstwhile peasants, now factory-hands.

  this is the same logic of the rich man's wealth causing his own robbery. the expropriation of the commons seems to me completely unrelated to the urban industrialization. that there developed a ready market for foodstuffs in the cities is irrelevant: crops could have been exported. that is, had the industrial revolution not provided the urban jobs, mass starvation could easily have occured, the landholders would have found other profitable markets for their produce. i don't see a causal link between industrialization and the expulsion of the peasants from the commons, so no multiplier effect.

  second: once england embarked on industrialization, the reforms set in play competitive pressures amongst her trading partners, and so industrialization spread outwards. nothing novel here, transition-pains notwithstanding.

  third: your argument centers primarily about food availability, but i think this line of reasoning ignores the other aspects of moving from an agrarian to an urban setting. much like the first generation of immigrants often struggles just to survive (must create a new social network, learn new skills etc.), the second generation builds on the base left by the first, and so on. many of the first generation are resigned to seeing no improvement in their lot, but are confident that their children will be the beneficiaries of their sacifices.
  urbanisation allowed specialization to occur, but developing these new skills didn't happen overnight. any process of flux creates difficulties, let alone changes of this dimension.

  in summary, to me it's only a lag-time debate. mortality figures started improving from the 1850's onwards, and have not yet regressed. the industrial revolution ended at the beginning of the 20th century. there's a 50 year delay before the benefits of industrialization completely overwhelm the payoffs, and show up in increased per-capita prosperity.
  

  Published: January 2, 2008 10:16 PM

• newson

  the last paragraph reads rather poorly. take#2:

  in summary, to me it's only a lag-time debate. mortality figures started improving from the 1850's onwards, and have not yet regressed. let's say the industrial revolution started at the beginning of the nineteenth century, and ended at the beginning of the 20th century. so there's a 50 year delay before the benefits of industrialization completely overwhelm the payoffs, and show up in increased per-capita prosperity (measured by whichever criteria you may choose - food intake, longevity, childhood mortality, etc).
  can't see the problem.
  

  Published: January 2, 2008 11:07 PM

• P.M.Lawrence

  Fundamentalist, look way up there at my post of when I addressed Inquisitor's blanket assertion "So the Industrial Revolution didn't improve situations? Oh wait, it did." What I've been doing is supporting my qualification of that assertion, that began with "Only for some people; it made losers out of others..."

  So I'm actually saying something stronger than merely "...some people didn't benefit from the Industrial Revolution", some were losers, and I've been trying to clarify why and in what respects they were losers.

  Newson, it simply isn't true "that there developed a ready market for foodstuffs in the cities is irrelevant: crops could have been exported... the landholders would have found other profitable markets for their produce" - not for Britain in that era. You are describing precisely the situation that made trouble for the poor in France while it was still mainly agrarian and after the Repeal of the Corn Laws, before it moved the problem one country further on by industrialising in its turn.

  For France, Britain was that other market - but there were no significant other markets for food from Britain at the time this hit Britain (the sugar colonies imported food from North America more easily). The nearest thing there was to this was, supplying corn for gin - but that got cut back.

  The causal link should be clear regardless of this, since industrial workers did constitute a cash market for food. Had they not been there, there would have been less incentive for landowners to cut back on peasants to free up food for sale until other markets opened up. At the very least matters would have slowed down until that happened. Hypothetically it could have happened, if some other country had industrialised in that gap.

  "once england embarked on industrialization, the reforms set in play competitive pressures amongst her trading partners, and so industrialization spread outwards. nothing novel here, transition-pains notwithstanding." What is novel, or at any rate relevant, is that these were not transition pains, even though each country that got them came out the other side; there was a conservation effect. The food shortfalls simply got moved around until - at the end of the period under discussion - they reached countries that didn't have the constraints.

  "your argument centers primarily about food availability, but i think this line of reasoning ignores the other aspects of moving from an agrarian to an urban setting..." - not so much ignores as abstracts out. Quite simply, I was concentrating on physical effects that no amount of adaptation could have done anything about, except at the individual level by moving food from mouth to mouth. Abstracting means focussing on one point to make it clearer, here the point that there were losers in the early stages of the Industrial Revolution.

  As for "in summary, to me it's only a lag-time debate... can't see the problem", yes, of course it's a time lag debate; I pointed that out right at the beginning, in qualifying Inquisitor's blanket assertion. But to the extent that anyone makes that kind of claim, or to anyone who is interested in what happened to the people involved, that ensured a problem. You might be interested in John Barnes's often reprinted essay on the area, "Two Cheers for Ned Ludd". e.g. in his collection "Apostrophes and Apocalypses".

  Published: January 5, 2008 2:37 AM

• newson

  to pm lawrence:
  my understanding of the motivation behind the enclosure of the commons is that the primary driver was the "efficiency" argument, or at least that is how it was "sold" into law. landholders were keen to implement new scientific techniques like the use of clover/legumes instead of the peasant tradition of fallow fields and crop rotation. jethro tull's seeding innovations favoured large land areas. crop selection and animal husbandry also favoured the well capitalized, at the expense of the peasant farmers. so i'm not convinced the enclosures weren't very much on the cards, in any case. but i concede what you're saying, it may have been an accelerant in the urban migration.

  john barnes now joins nassau senior on my homework list. thank you.

  Published: January 5, 2008 7:33 AM

• fundamentalist

  PM: "...some were losers, and I've been trying to clarify why and in what respects they were losers."

  No change of any kind that takes place benefits everyone equally, whether the change is simply a change in the weather or as complex as a new social system. So to judge something like the Industrial Revolution by the simple fact that it did not benefit everyone equally is plain silly. I know you're not a socialist, but you got that kind of thinking from socialists. The real question is on the whole, all people considered, did the Industrial Revolution improve the standards of living. Of course it did. The whole history of the 19th century is one of progressively higher standards of living. The 19th century was the century in which England pulled away from the grinding poverty that much of the world still endures. The Dutch had done the same thing two centuries earlier and the English learned many of their ways from the Dutch.
  

  Published: January 5, 2008 8:02 AM

• Inquisitor

  PM, thank you for clarifying your intentions. I have repeatedly stated that industrialization was far from ideal. My point was simply that comparing it to the Black Plague was unfair, and in fact fallacious.

  Published: January 5, 2008 9:44 AM

• newson

  to pm lawrence:

  rothbard said:
  "For a refutation of the enclosure myth and a recognition of the key being increase of population, see W.H.B. Court, A Concise Economic History of Britain (Cambridge University Press, 1954)."

  i don't have ready access to his source. maybe someone out there in misesland can do the leg-work?

  Published: January 6, 2008 2:01 AM

• P.M.Lawrence

  Newson, enclosures were "sold" on their efficiency, and many landowners may well have acted with only that in mind; the choking off that would have happened, if the evicted had become vagrants the way they had after the first (Tudor) round of enclosures rather than industrial workers, simply never happened. But " rel="nofollow">Kevin Carson has some contemporary accounts of evictors knowingly and deliberately sending evictees into factories. Likewise Marx describes some Scottish landowners doing the same (somewhere towards the end of "Capital" I believe - know your enemy). But that kind of thing must have been rare because of the lack of nexus - connection - between landowners and factory owners. Far from any class solidarity, they were often antagonistic interests.

  There are two other things to bear in mind; efficiency isn't just about outputs, but about outputs to inputs. There was a wealth transfer, due to the lack of due compensation from not recognising interests in commons properly. Also, peasant cultivation led to a reluctance to try new crops and methods for sound reasons; the risk of failure could lead to catastrophe, where when "Turnip" Townsend (say) introduced turnips he wasn't risking so much personally.

  Nassau Senior's work is available on the internet, by the way.

  Fundamentalist, you are still doing an association of ideas thing and hearing only what I remind you of.

  "So to judge something like the Industrial Revolution by the simple fact that it did not benefit everyone equally is plain silly."

  Yes! So, why do you think I asserted anything so trite as a test? I asserted, then demonstrated, that until the 1830s or so physical constraints meant zero sum for food supplies, which in turn meant that any gainers brought about actual losers, people who were worse off - not merely people who didn't gain as much as others. The historical record shows this too, but many people dismiss this as a failure to adapt fast enough when it was actually an unavoidable consequence of the physical constraints. (Aside: a book review in a recent Economist - I forget just which - mentions how New World food supplies allowed the Industrial Revolution to bypass these Malthusian issues, but it ignores the timing issue that made that help unavailable in a crucial period.)

  So, for "The real question is on the whole, all people considered, did the Industrial Revolution improve the standards of living. Of course it did." - right question, wrong answer (as a blanket answer, unqualified by period). Even more wrong for the "of course", because that means you won't examine your assumptions.

  "The whole history of the 19th century is one of progressively higher standards of living" - wrong, because...

  "The 19th century was the century in which England pulled away from the grinding poverty that much of the world still endures" - not until after the 1830s in terms of physical possibility (and political delays meant that the Repeal of the Corn Laws that had hindered food imports didn't happen until 1846); so not the whole history.

  You can actually find a good economic history summary of the late 19th century/early 20th century in the introductory material in Keynes's "The Economic Consequences of the Peace", written before he came up with Keynesianism; it's on the internet somewhere.

  "The Dutch had done the same thing two centuries earlier and the English learned many of their ways from the Dutch" - well, no. The trade orientation had come from there, also canal building and land improvements from drainage etc., but these were the necessary preliminaries that provided the surplus before the Industrial Revolution proper. That hadn't drawn on the Dutch example except in the culture sense, of being capitalist enough for it to happen.

  Inquisitor, there is one area in which the Industrial Revolution is comparable to the Black Death/Plague ("Black Plague" is mixing two names). That is when you are considering aggregates and later consequences. Each "improved" average standards of living through survivor bias (you don't count the casualties, the way early hospital discharges improve health statistics or the way shooting AIDS victims would improve AIDS rates even before it cut down new infections). So it's a valid extreme case of survivor bias to use to highlight misuse of statistics; where it goes wrong as a comparison is, it was a clear harm. Also, each improved available - uncommitted - resources for later periods, which led to improvements then; that is why "average standards of living" and related statistics are sound for that. (Aside: a review in a recent Economist of a book about Genghis Khan brought out this silver lining for later generations from the Black Death.)

  I can't help on the Rothbard/W.H.B. Court reference, but the trick to remember in any of these accounts is that they have to focus and so only ever cover particular aspects - the way I have had to here - and "myths" may well be factually accurate but misapplied to application areas that are irrelevant.

  Published: January 6, 2008 3:13 AM

• newson

  pm lawrence:
  "Inquisitor, there is one area in which the Industrial Revolution is comparable to the Black Death/Plague ("Black Plague" is mixing two names). That is when you are considering aggregates and later consequences."

  though of course the per-capita gains from the bubonic plague were in time overcome by the usual malthusian constraints (additionally, much of the capital stock in those days was wooden - pretty fierce depreciation!)
  malthus may well come back into vogue, for no other reason than the enormous (government) roadblocks place in the way of capital accumulation. i don't believe the horsemen of the apocalypse ever disappeared, just that we stole a good march on them.

  Published: January 6, 2008 8:51 AM

• fundamentalist

  PM: "Yes! So, why do you think I asserted anything so trite as a test? I asserted, then demonstrated, that until the 1830s or so physical constraints meant zero sum for food supplies, which in turn meant that any gainers brought about actual losers, people who were worse off - not merely people who didn't gain as much as others."

  You asserted a lot of things, but you most certainly haven't demonstrated anything, let alone that "physical constraints meant zero sum for food supplies." Neither have you demonstrated that "any gainers brought about actual losers." If I'm wrong please point me to the sections where you demonstrated these things.

  PM: "...and political delays meant that the Repeal of the Corn Laws that had hindered food imports didn't happen until 1846..."

  Do you really want to blame the Corn Laws on the industrial revolution?

  
  PM: "The trade orientation had come from there, also canal building and land improvements from drainage etc., but these were the necessary preliminaries that provided the surplus before the Industrial Revolution proper. That hadn't drawn on the Dutch example except in the culture sense, of being capitalist enough for it to happen."

  
  No, the Dutch essentially created capitalism by giving their people equal protection under the law and real protection for property for the first time in Europe, excepting possibly Venice. As a result, the Dutch were the first people in Europe to escape regular famines. The English "imported" Dutch capitalism through the "Glorius Revolution of 1688. See "The Dutch Republic" by Israel and "The First Modern Economy" by de Vries.

  I doubt you and I will ever agree on any historical period because you seem to have immersed yourself in socialist writing and I have immersed myself in capitalist writing. One thing you might consider is the ovewhelming bias that professional historians have for socialism. You may think that historians are being unbiased transmitters of historical fact, but frequently they select their material and evidence in such a way that it supports socialism.

  Published: January 6, 2008 3:06 PM

• P.M.Lawrence

  Newson, as near as we can tell the bubonic plague bought about two centuries, since that was about how long it took for populations to recover from being about halved and about when problems of large scale poverty recurred. But there are too many complicating factors to be sure. (It wasn't the only time populations had been halved either, though not usually over such a broad area; the population halved in the generation following the Norman Conquest.)

  Fundamentalist, you really don't take stuff on board but instead filter everything through preconceptions and come up with whichever idea you get reminded of rather than what you are told. So, rather than attempt to instruct you further, I shall highlight some of this in order to warn people against what you are telling them:-

  - "You asserted a lot of things, but you most certainly haven't demonstrated anything..."; readers, look at what I wrote, particularly places where I wrote things like "I demonstrated it here, here, and here." (There's no point giving Fundamentalist the same references all over again.)

  - "Do you really want to blame the Corn Laws on the industrial revolution?"; of course not, readers, this is a rhetorical trick, inviting me to go out on a limb. I was pointing out that political difficulties stretched the problems (that Fundamentalist denies existed) out after the physical difficulties faded.

  - "No, the Dutch essentially created capitalism by giving their people equal protection under the law and real protection for property for the first time in Europe, excepting possibly Venice" - there was nothing equal about the Dutch republic; it had privileges for certain groups, monopolies like the Dutch East India Company, and hegemony of certain regions over others. And there was a lot of prior history of capitalist behaviour in the Middle Ages, especially in a belt curving from the Low Countries to northern Italy; google Meir Kohn's work.

  - "...As a result, the Dutch were the first people in Europe to escape regular famines"; well, only to the extent that they pushed the problems onto others. But yes, they did manage it through their mercantilist version of early capitalism.

  - "I doubt you and I will ever agree on any historical period because you seem to have immersed yourself in socialist writing and I have immersed myself in capitalist writing"; readers, the former is jumping to a conclusion which is actually self-disproving (I wouldn't have come to Fundamentalist's attention if I didn't come to sites like this and check out things I might not have known). The latter is describing Fundamentalist's own narrowness in not looking round more widely than his own preconceptions, plus he appears not to admit certain capitalist writers like Nassau Senior who bring up material and/or implications that don't fit his own preconceptions.

  - "One thing you might consider is the ovewhelming bias that professional historians have for socialism. You may think that historians are being unbiased transmitters of historical fact, but frequently they select their material and evidence in such a way that it supports socialism"; readers, you might like to note that Fundamentalist tries to tar any writers, materials and/or implications that don't fit his own preconceptions with that brush. He even tried accusing me of it until someone else pulled him up on it; now he just hints that I have been led astray by socialism.

  Readers, read. Then you will see what adds up and where it comes from and where it can be checked out.

  Published: January 6, 2008 7:31 PM

• newson

  pm lawrence:
  "Inquisitor, there is one area in which the Industrial Revolution is comparable to the Black Death/Plague ("Black Plague" is mixing two names). That is when you are considering aggregates and later consequences. Each "improved" average standards of living through survivor bias (you don't count the casualties..."

  i'm not convinced the survivor bias applies in the case of the industrial revolution. whilst the early period may well have been a zero-sum gain, life expectancy remained essentially static in the face of very strong birthrate increases. from 1791 to 1831, the english population went from 7.74 to 13.28m, the primary factor being increased fertility (figures from E.A. Wrigley, 'The growth of population in eighteenth-century England: a conundrum resolved', Past and Present, 1983.)

  to return to your example of the new zealand dairy farmers, naturally it's impossible to compare incomes post-rationalization with pre-reform incomes. apples and oranges, as you say. but whilst the losers are easy to isolate, the winners are not. the gains in the re-utilization of resources, post-deregulation, are diffuse and not identifiable. there is also the "victim bias", that is those who go on to successful second, non-dairy careers remain silent, those unable to do so have an interest in sharing their woes.

  Published: January 6, 2008 9:01 PM

• P.M.Lawrence

  Newson, survivor bias isn't very significant in the case of the Industrial Revolution in general. However, there are particular subcases within that where it can crop up, and - more importantly - if you go out of your way to use the wrong tests you risk bringing it in. For instance, Fundamentalist did that way up there with "For all of society, new technologies improve wages and the standard of living by reducing costs". This test would show improvements during the Industrial Revolution honestly in the later period, but it would also show improvements even if - especially if - things had got so bad that lots of people had died off. Now, it got close to that, but it didn't quite hit that, so why does this matter? Because the test isn't simply sensitive to improvements, you can't work backwards from claims like "GDP per head improved" to get "things improved". Of course you don't run that risk if you start nearer the data source, but survivor bias shows that you have to start nearer the data source - you can't read meaningful inferences from "GDP per head" for our present purpose. Descriptions of the Black Death aren't meant so much to show that it was comparable to the Industrial Revolution (it wasn't) so much as to show that if you only go from that sort of measure you make them comparable, from using a measure that they both look the same under. It's not a comparison so much as a reductio ad absurdum; once we start using the statistical insights properly, we don't get survivor bias coming out, we get a prudent attitude that says "we know that things like survivor bias can happen, so we have to watch out for them in case they ever do come up - and then, we can adjust for them". So it's a precaution, really.

  "Victim bias" isn't a feature of statistics; it's anecdotal, not something that shows up if you boil the numbers up the wrong way.

  Published: January 7, 2008 12:07 AM

• newson

  ...hence my reluctance to use gdp for archaic examples. i think the mortality figures are a valid proxy, but haven't yet had time to read nassau's three essays on wages.
  point taken on survivor bias, for this reason i'd been careful not to be ignore the death stats.
  
  i read the keynes' introduction, & will look at kit carson, as well as the austrian critiques on his work.

  Published: January 7, 2008 1:43 AM

• fundamentalist

  PM: "There's no point giving Fundamentalist the same references all over again."

  Yes, it's difficult to provide something that doesn't exist, isn't it?

  PM: "...there was nothing equal about the Dutch republic..."

  Jonathan Israel (The Dutch Republic), the Harvard historian, and Jan de Vries (The First Modern Economy) disagree.

  Published: January 7, 2008 10:38 AM

• newson

  to pm lawrence:

  a propos of carson, reisman takes a withering view of his industrial revolution analyses (especially his idealization of the cottage industry via-a-vis the factory) in this journal article - http://mises.org/journals/jls/20_1/20_1_5.pdf

  Published: January 7, 2008 11:26 PM

• newson

  following fundamentalist's indications, the israel work is available online at http://www.questia.com/PM.qst?a=o&d=91981119

  Published: January 8, 2008 9:51 PM

• P.M.Lawrence

  Newson, on the information available to me, it appears that after Carson published his material in the JLS, Reisman and to a lesser extent Block got hold of the wrong end of the stick and reacted not to what he wrote but to what he reminded them of - the Fundamentalist approach (I was referring to Reisman in 'Often he objects to things that those he calls Vulgar Libertarians praise, on the grounds that these things are not capitalist but just pretending to be, wolves in sheep's clothing. When people see him describe this as "actually existing capitalism", some of them just do an association of ideas thing. Some who should know better, e.g. R...' earlier). But Reisman really wouldn't let it rest, even after he was put straight.

  Here's something in support of that. On googling Carson and Reisman I immediately found a site where someone who had compared the two had come to that conclusion. I also found Carson's list of the alternating accusations and rebuttals, so if you want to check for yourself you can.

  Here's my own quick run through of some stuff in Reisman's pdf that I found by searching for "cottage":-

  "For example, Carson quotes at length a virtual fairy tale presented by one Kirkpatrick Sale, according to which the cotton industry's machinery based on Watt's steam engine and Arkwright's frame the leading advance of the early Industrial Revolution did not represent any actual improvement over an alleged cottage-based, one-person machine built around the spinning jenny and perfected earlier" - but they didn't, any more than the flintlock was an improvement over the wheellock; each was more cost-effective, but actually performed worse in terms of achieving the desired output. "Two Cheers for Ned Ludd" made it quite clear that the output was so inferior that it took a major war and government contracts for the machine product to outcompete.

  "Carson and Sale apparently never heard of such things as the Luddites and the later attacks on machinery in 1826, both occasioned by the inability of cottage producers to meet the competition of factories" - they had heard of them, and knew quite well the kind of rigged market that caused the outcompeting.

  "Carson's naïveté and rejection of the modern world extend to extolling the virtues of spade cultivation over that of using the plow (Carson, p. 156), and to claiming that to induce subsistence farmers to earn money, it is first necessary to impose taxes on them payable in cash, as though the goods available for purchase with cash, which they both desire and would have no means of producing by themselves, would not constitute a sufficient inducement (p. 177)" - well, first off, Carson never insisted on only using primitive methods - Reisman made that up. But most importantly his rebuttal is also made up. The historical record shows that those methods were used in industrialising countries and in colonies (why, if they weren't needed?), and that where a free choice was available, people did indeed mostly stay where they were (e.g. staying out of the Leverburgh fish factory). Sophisticated living only has enough additional pull once you are well past a tipping point; maybe Reisman was thinking that today's pull applied back then.

  "Once again, Carson's view is directly contrary to the facts. Since the beginning of the Industrial Revolution, in all advanced countries, the proportion of the labor force that is employed in agriculture has been steadily declining. This has come about not as the result of people having been driven from the land or being denied access to it, but as the result of millions upon millions of sons and daughters of farmers one by one voluntarily choosing to abandon agriculture in favor of moving to towns and cities to work as wage earners." Where is he getting that "voluntary", bearing in mind that the historical record shows that many people were "driven from the land or ... denied access to it".

  As for Fundamentalist's suggested reading, it isn't quite accessible (there's a registration barrier), but even the taster showed that Israel knew about the Dutch Patriot Revolution that, as I recalled, happened right before the French Revolution but was put down by the Prussians. That was when those things came to a head, but of course the institutional imbalances I mentioned had been there for quite a while (apparently the province of " rel="nofollow">Drenthe never had been represented in the States-General because it couldn't afford it - it was at the bottom of the hegemonic heap). So it appears that Fundamentalist was cherrypicking again, misrepresenting the quite long period in which things had not flared up as showing that the Dutch had a system that was intrinsically equitable.

  Published: January 9, 2008 2:39 AM

• fundamentalist

  PM:"So it appears that Fundamentalist was cherrypicking again, misrepresenting the quite long period in which things had not flared up as showing that the Dutch had a system that was intrinsically equitable."

  No, I was not cherry picking. I was comparing the Dutch Republic with nations. No nation has ever had perfect equality. You like to choose the exceptions and portray them as the norm, which is the real definition of cherry picking. You also prefer to compare reality to perfect theory, but theory will always trump reality. Socialist theory works fine on paper, but even after killing 100 million people trying to implement it during the 20th century, it still failed.

  Published: January 9, 2008 8:21 AM

• fundamentalist

  PM's main problem with the industrial revolution is that it didn't conform to a socialist's idea of what it should have been. But when reasonable people compare reality with reality, that is, compare the state of the poor and working classes in England with that of the poor and working classes anywhere else in the world, or with the state of the poor and working classes before the industrial revolution, honest people can't help but conclude that it benefited those classes enormously.

  Published: January 9, 2008 8:24 AM

• Inquisitor

  "Socialist theory works fine on paper"

  I'm surprised you'd say this as an Austrian. Their theory is perhaps their weakest point.

  Published: January 9, 2008 8:31 AM

• newson

  having read the long and reisman critiques of carson in the jls, i'll take a look at carson's reply (same journal). the link: http://mises.org/journals/jls/20_1/20_1_7.pdf

  Published: January 9, 2008 9:00 AM

• newson

  to pm lawrence:

  do you know whether the ned ludd essay is freely available online?

  Published: January 9, 2008 9:13 AM

• fundamentalist

  inquisitor: "Their theory is perhaps their weakest point."

  You're right. I was looking at if from a socialist's perspective. In their minds, it works on papers, as in all of the books written by socialists. But so far they haven't been able to instantiate a version that works.

  Published: January 9, 2008 12:28 PM

• P.M.Lawrence

  Newson, sorry, I don't think John Barnes's "Two Cheers for Ned Ludd" is available online (I googled for it a while back). But you should be able to find it fairly easily as hard copy, in his collection "Apostrophes and Apocalypses".

  Readers, observe this from Fundamentalist:-

  "No, I was not cherry picking. I was comparing the Dutch Republic with nations. No nation has ever had perfect equality." This moves the goal posts considerably, backing down on his original claim that "No, the Dutch essentially created capitalism by giving their people equal protection under the law and real protection for property for the first time in Europe, excepting possibly Venice" - in fact it is consistent with my rebuttal of that, "there was nothing equal about the Dutch republic; it had privileges for certain groups, monopolies like the Dutch East India Company, and hegemony of certain regions over others".

  - "You like to choose the exceptions and portray them as the norm, which is the real definition of cherry picking" - but I didn't and don't do that. Where I use exceptions, it is only as counter-examples to overly broad generalisations; that is a valid use. However, many of what I put up are illustrations of quite widespread behaviour; it is only filtering them through preconceptions that can make them look like exceptions to a norm.

  - "You also prefer to compare reality to perfect theory, but theory will always trump reality" - but, readers, I have done the opposite. For instance, starting with the observed and reported facts of food constraints in a crucial period, I drew on that - but only for the period where it applied. I then examined what went on at the time, and did not find counter-examples despite keeping my eyes open for them (e.g, I did find reports of people suffering). Theory is valuable, but you don't start from there, you build it up as a tool to get you farther; you start from observation, direct or indirect.

  - "Socialist theory works fine on paper, but even after killing 100 million people trying to implement it during the 20th century, it still failed" - notice, he is again trying to associate what I described with socialism, despite none of this having anything to with that.

  - "PM's main problem with the industrial revolution is that it didn't conform to a socialist's idea of what it should have been" - and here he is again trying to associate me with socialism, more ad hominem (yes, it's ad hominem even if it isn't something shameful; he is trying to mark me, not what I describe, in a way that would discourage the easily deceived from actually looking at what I describe).

  - "But when reasonable people compare reality with reality, that is, compare the state of the poor and working classes in England with that of the poor and working classes anywhere else in the world, or with the state of the poor and working classes before the industrial revolution, honest people can't help but conclude that it benefited those classes enormously" - readers, notice he isn't actually doing any of that comparing, he is reporting an unsubstantiated conclusion. Me, I actually did look - and he is wrong, unless you do one of two things: look outside the crucial period; or, don't count the casualties (for instance, obviously those in work were better off than those not in work, at any given time).

  Published: January 9, 2008 9:27 PM

• newson

  i found carson's spirited rebuttal of long and reisman's criticisms more convincing than i'd bargained on; so i'm going to reserve judgement.

  i daresay dumping carson in the marxist camp was a gross tactical error by reisman. on the contrary, he deserves far closer attention than the garden-variety marxist. forensic criticism, maybe.

  to pm lawrence:
  carson mentions a number of technological "innovations" that he maintains would not have prevailed at the time of their introduction had they not been given a "helping hand" by the powers that be. here, i wonder whether this isn't the case of the qwerty vs dvorak keyboard dialectic? competing technical claims, conflict of interests, and probably a bit of critical market mass make it very difficult to judge "superior" technologies, especially after the event.

  in any case, i view the market process, arguably even with statist distortions, as the best of a bad lot.

  Published: January 10, 2008 4:26 AM

• P.M.Lawrence

  "...i'm going to reserve judgement". Newson, that's precisely how I described you in a comment linking here in a recent thread at Kevin Carson's site that also brought up Reisman and the JLS.

  I don't have a thorough list of the sort of improvements that were helped on, but I do know (a) it often happened and (b) it was not usually a deliberate statist/corporatist policy but a side effect of other state actions - notably, of war.

  A while back I went into the economic history of British transport in a
  guest post at " rel="nofollow">John Quiggin's site. One interesting thing was, steam traction developed past a tipping point because of a horse shortage during the Napoleonic Wars. That ended with the wars, but it was a damned close thing that steam had passed that tipping point, i.e. that it was more competitive than horses; a horse contraption did quite well in the steam trials that shot Stephenson's "Rocket" to fame.

  There's more to the comparison. Some writers report Marc Isambard Brunel's success with mechanising the production of pulley blocks for the Royal Navy. But they get too selective and leave out the part where all his contracts were cancelled at the end of the wars as hand - literally manu - manufacture became competitive again. He went broke. Similarly, World War I boosted aviation developments, but Tommy Sopwith of Sopwith Camel fame went broke in 1918 in the same way (he learned his lesson about not trusting government contracts and structured things differently for World War II; see also Nevil Shute's autobiography for comments on government contracts). World War I also produced a pool of trained drivers, so road transport became a viable alternative to rail in Britain - and that got pushed past a tipping point by the General Strike of 1926.

  Anyhow, there were lots of helping hand examples, but the way support was just as often cut back too fast for viability shows how it was incidental and not statist/corporatist policy. About the only conscious British policy along those lines I know of is, subsidising the Merchant Marine to behave in ways that paid back by maintaining a Naval Reserve.

  By the way, at first glance some of this economic history appears to support the "infant industry" argument for protectionism, but all the cases I have seen passed tipping points that related to positive network externalities or economies of scale external to the firm, nothing to do with the maturity of the industry at all (well, maybe with steam traction, just a bit - but there were positive network externalities involved there too). So it's not a sound policy unless you know where these are; if governments have to pick the winners they are likely to fail, but they can realistically get it right when they are going for effects that have turned up elsewhere already.

  (Oh, the "internal improvements" that seemed to come from the Erie Canal were illusory; that was very good for the USA though, because it diverted existing Great Lakes trade that had already reached a critical mass away from Montreal and Quebec to New York.)

  Published: January 10, 2008 6:53 AM

• P.M.Lawrence

  I hate the way the preview isn't WYSIWYG and doesn't show me missing end tags.

  Published: January 10, 2008 6:56 AM

• fundamentalist

  PM: "...readers, notice he isn't actually doing any of that comparing, he is reporting an unsubstantiated conclusion."

  In this case, I don't need to. The history and data are readily available, and anyone can see that the poor and working classes were far wealthier at the end of the 19th century than at the beginning thanks to the industrialization of England. Even Marx grudingly praised the amazing productive capacity of capitalism. Were there setbacks? Of course. But they usually ocurred because of governmental intervention, not capitalism or industrialization.

  You seem fixated on the fact that agriculture didn't progress as fast as industrialization, and therefore prices might have risen on occasion. While that may be true, what does it have to do with the benefits of industrialization? Industrialization did not cause stagnation in agriculture. The only logical effect industrialization could have on agriculture at the time would be to increase the demand for produce and increase the profitability of farming and the wages of farm hands. If imports didn't fill the gap, that would have been because of government intervention resulting from mercantilist policies.

  An important point to keep in mind is the difference in methodology between Austrian econ and most other sciences. Austrians tend to derive truths from axioms; other sciences try to amass emperical evidence for their side. But Austrians aren't fooled by emperical evidence that appears to counter a priori reasoning. For example, if some empericist discovers that people are buying more of a product even though the price has increased, that doesn't invalidate the principle that the demand curve slopes downward. It means that something besides price is affecting their decisions.

  In the same way, finding historical evidence that some people didn't benefit from the industrial revolution doesn't destroy the principle that industrialization is good for the poor and working classes because it raises real wages. In fact, only Marxists would argue against that principle. Finding counter examples only means that other forces, such as government intervention, are at work.

  As for you being a socialist, I have never called you that. As I wrote before, your ideas originated with socialist writers whether you recognize it or not. Besides, if you're an admirer of Carlson, who is a devout Marxist, why would you be ashamed to be called a socialist?

  Published: January 10, 2008 8:40 AM

• Inquisitor

  Newson, see Callahan's Economics for Real People on Qwerty vs Dvorak. The argument does hold some merit though. MS, for instance, profits immensely from the government's use of its software, and obviously the State does skewer the market's structure.

  Published: January 10, 2008 9:02 AM

• Inquisitor

  Economic theory is indeed axiomatic-deductive in its nature, and cannot be refuted empirically (only logically.) However, whether the Industrial Revolution was on the whole beneficial is a matter of empirical investigation (especially because markets were not the only force at work here.) It's best not to get into a debate over methodology where it isn't wholly relevant. I need to do my own studies to reach a conclusion on the Industrial Revolution regarding food production. So whether the IR was good or bad is an empirical matter; why it was so is for praxeology to answer, at least where it applies.

  Published: January 10, 2008 9:16 AM

• Inquisitor

  One other thing - I realize Carson makes significant use of Marxian political theory (and to an extent, economic theory), but he is still heavily influenced by the Austrians, and is essentially a market anarchist of sorts. It isn't entirely fair to brand him a socialist, especially given that he is sympathetic to Austrianism.

  Published: January 10, 2008 9:20 AM

• fundamentalist

  inquisitor: "So whether the IR was good or bad is an empirical matter;"

  The IR was the industrialization of England. What we call industrialization is nothing more than the "roundabout" processes of Austrian economics. The core of Austrian econ is the principle that more roundabout processes, or as Hayek writes, more capitalistic processes, reduce costs, improve quality, increase wages, and generally increase the wealth of a nation. So if it's true that the industrialization of England did not benefit the English, then either Austrian econ is wrong, or some factor besides industrialization overpowered the beneficial effects of industrialization. A good culprit for that would be government intervention.

  The former USSR is a good example. The nation industrialized heavily before and after WWII, but the people did not benefit from it. Their standards of living continually fell. So would you blame industrialization?

  As for Carson, I'm not an expert on him but what little I've read indicates that he supports anarchy, not Austrian econ. His econ appears to directly oppose Austrian econ, especially with his emphasis on the labor theory of value, small enterprises and his opposition to the division of labor. I would say he is friendly to Austrians who are also anarchists, but not to Austrian econ.

  Published: January 10, 2008 12:56 PM

• Inquisitor

  That is my point. We're treating the IR as a free market phenomenon, when it might not be. I'm not suggesting Austrian econ is wrong on this, far from it - just that there was an extra-market institution in existence at the time, that may have had similar albeit far less dramatic results as the USSR.

  On Carson, I know that his theory of value is not overly different from Dr Reisman's, and that both lead back to the STV and MUTV anyway. I've not seen him try to discredit Austrians at all, and he typically uses Austrian analysis in his work, especially on politics. But like you I am not overly familiar with his work.

  Published: January 10, 2008 6:56 PM

• P.M.Lawrence

  Readers, note Fundamentalist's bait and switch in "...anyone can see that the poor and working classes were far wealthier at the end of the 19th century than at the beginning thanks to the industrialization of England". These "the poor and working classes" are not the same people, opening it up to survivor bias, and "the end of the 19th century" is after the period during which the problems happened and been cleared up. As I pointed out, "he is wrong, unless you do one of two things: look outside the crucial period; or, don't count the casualties" - and that is just precisely what he is doing here.

  As for "You seem fixated on the fact that agriculture didn't progress as fast as industrialization, and therefore prices might have risen on occasion" - nonsense! Prices don't come into it, accessibility does, i.e. the real wage in cash and in kind, not as an average but as available at the lower bound.

  "The only logical effect industrialization could have on agriculture at the time would be to increase the demand for produce and increase the profitability of farming and the wages of farm hands" is limited, since it is not the effect on agriculture that counts, it is the flow on effect on food acessibility. And, of course, "the wages of farm hands" (and other rural workers) did rise - but there were fewer of them, and the retrenched didn't get that (survivor bias again).

  "...finding historical evidence that some people didn't benefit from the industrial revolution doesn't destroy the principle that industrialization is good for the poor and working classes because it raises real wages" - of course not, but finding historical evidence that it did not affect real wages per head across the board, plus evidence that some people gained this way, implies the necessary existence of losers (things not seen, again). Then he proceeds to dogma and repeating ad hominems.

  "...So if it's true that the industrialization of England did not benefit the English, then either Austrian econ is wrong, or some factor besides industrialization overpowered the beneficial effects of industrialization..." - Fundamentalist hasn't listed the entire range of possibilities, in this case the generational time lag before general improvements flowed through.

  Published: January 10, 2008 8:39 PM

• newson

  to inquisitor:
  yes, i did read callahan's book, though quite a while ago. i could have used the beta/vhs argument just as well. many technical people vouched for the superiority of beta, and cited vhs' success as evidence of "market failure", when a more considered view would have shown the smaller physical size and longer playing time were the winning points for the consumer. (can't recall whether this was in callahan, but the example is not novel).

  to pm lawrence: i've really got to bone up on carson. in his defence against reisman, particularly, i could see nothing of the crude marxist adherence to the labour theory of value. maybe reisman is well acquainted with carson's full body of work, but for me he didn't convince (and i've got a soft spot for him). i couldn't find anything that was inimical to the austrians, at least in the jls article.

  
  as regards small/large business units, i'm completely ambivalent. in italy, the wool/cashmere industry is centred around biella (piemonte). like virtually all industries in italy, the wool processing industry is a small company domain. thousands of small family-owned businesses in a complex network of interconnecting contacts and procedures.
  that the companies are small doesn't mean they are not state-of-the-art. the smallness comes partly from italy's byzantine legal system (lengthy delays and cost mean litigation is often fruitless, so you have more reliance on personal trust than in anglosaxon nations), partly from crippling taxes and regulations (ie stay under the radar), and finally the militant unionization of larger industries.
  the fragmentation (read nimbleness) of the industry means that even small fabric runs can be profitable, and so the chinese haven't been able to attack the luxury fabric market, like they have for the large-run budget fabrics. viva la differenza!

  Published: January 10, 2008 11:00 PM

• TokyoTom

  Let's not forget that an important fact in the industrialization of England was the process of private and legislative theft in the form of the "enclosure" of commons and the elimination of commond property rights. This directly eliminated many villages and the basis of support of much of the countryside, who then provided a workforce for growing industrialization.

  Published: January 11, 2008 3:21 AM

• Kevin Carson

  Fundamentalist and newsom,

  I'm not getting into the whole IR thing because PM Lawrence is doing a better job of it than I can anyway.

  But I would like to add something on the specific issue of roundabout production methods and capital accumulation. First of all, it's not some Austrian dogma written in stone that increased roundaboutness or capital intensiveness increases productivity. Bohm-Bawerk stated it as a general empirical rule, but not as something self-evident.

  Second, it's true only to a limited extent in any case. There is an ideal level of capital-intensiveness in any industry beyond which unit costs begin to rise. And the ideal level of capital-intensiveness tends to rise with market area, so anything that makes distribution artificially cheap will also make more capital-intensity and a higher degree of division of labor artificially profitable compared to the alternative. For example, the larger the market area, the more specialization of machinery will be profitable. In small market areas, on the other hand, general-purpose machinery and the substitution of capital for labor may be more profitable. It is a mistake to argue that roundaboutness as such, outside of any situational context, is directly related to productivity. A Rube Goldberg machine is the most roundabout form of production imaginable.

  Money inflation will also make artificially profitable a greater degree of roundaboutness or capital-intensiveness than would prevail in a free market. The Austrians call it malinvestment, but it's essentially the same as what neo-Marxists call overaccumulation.

  BTW it's odd how much parallelism there is between some Austrians' views on roundaboutness, and the views of technocratic liberals like Schumpeter, Galbraith, Chandler, etc., on unlimited economies of scale.

  On the question of my ideological orientation, my basic framework is the individualist anarchism of Benjamin Tucker and William Greene. I make use of Austrian ideas in pretty much the same way that I make use of Marxist ideas: I adopt what can be usefully integrated into my own framework and leave the rest. Like Tucker, who was also on the fringes of both the classical liberal and libertarian socialist movements, I tend to view both state socialists and vulgar libertarians as erring brethren.

  What's really interesting is the parallelism between some radical interpretations of Austrianism and some 20th century neo-Marxist thought. For example Joesph Stromberg, in "State Monopoly Capitalism and Empire" (I recommend Googling it) pretty much recapitulates neo-Marxist theories of overproduction, overaccumulation and empire based on Misesian/Rothbardian theories of malinvestment and regulatory cartelization. And the Misesian theory of the "crackup boom" bears a remarkable resemblance in some particulars to the neo-Marxist theories on the crises of late capitalism.

  Published: January 11, 2008 4:04 AM

• P.M.Lawrence

  Newson, I can make two observations on the Labour Theory of Value that start rather nearer empirical evidence (though the second does have a layer of inference on top of it).

  The first is that there actually were some special cases where it was implemented in setting up a cash economy. Fiat currencies were introduced in African colonies, backed by taxes. In some colonies, poll taxes were used. This was equivalent to backing the fiat currency with the opportunity cost of individual taxpayers' time during each tax period, particularly if the tax could be paid off by working on government projects like road building (having this fallback meant a rough de facto sliding scale, with taxpayers having one cash payment option and one work payment option). It would have worked even better if people who couldn't pay in cash actually got small cash wages for their work rather than garnisheeing all their notional pay as tax, since that would have trickled cash into the new cash economy, but I don't know if that was done. An analogy that helped me was, providing reactive volt amps so that induction motors can do regenerative braking, but if you don't know electrical engineering that will just be one more thing to understand first. But poll taxes work unevenly because people's opportunity cost of time (a proxy for the "value" of their labour) varies; that's why poll taxes worked better with sliding scales, and why hut taxes were often used instead.

  That brings us to the second observation. For this I was helped when I finally understood why - not how - a certain feature of car automatic transmissions worked. Gear changes are chosen according to how much power is being delivered, among other things. But this can't easily be measured directly, or even inferred easily. Instead, the transmission uses the inlet manifold pressure as a proxy for the power. For a long time I couldn't see the connection, because I could see how that could easily be a poor proxy in some circumstances. However, I eventually realised that the inlet manifold pressure is a good proxy for the oxygen supply, which is a good proxy for the power from combustion, and the power developed is a nearly fixed proportion of that; the last two are true when the engine is working optimally or close to it (because at first efficiency doesn't drop off much as you move away from the optimal), which the automatic transmission arranges. In other words, when you are near optimal, the inlet manifold pressure is a good proxy, and feedback stops you drifting too far from optimal, but it's not an absolute law sort of thing, it's the result of the feedback. My initial concerns were sound, it was just that matters were arranged to keep them from coming true.

  What has this to do with associating labour with value? Value does not derive from labour as such, but when an economy is working properly, actual value will end up properly correlated with labour inputs (after allowing for different sorts of labour having different value, a sliding scale again), because it always will end up properly allocated. Somebody who distorts things, say by paying people to dig holes and fill them in again, doesn't thereby make that valuable, but if there were a value there, say for archaeological research, then it would pay someone to hire workers to do it, and their labour would be an observable indicator of that value. This only works out because of the near optimality of the properly working economy, because that means the workers have to be drawn away from other productive uses, and their pay has to be too.

  Result: although labour content does not confer value, in a reasonably sound economy and subject to a sliding scale it indicates it, which is for many purposes the same thing - unless you go and distort the economy, say by making policy assuming the former, which is like expecting a car to go faster if you bend the speedometer needle.

  Published: January 11, 2008 7:09 AM

• fundamentalist

  Carson:"There is an ideal level of capital-intensiveness in any industry beyond which unit costs begin to rise."

  That's not what Austrians mean by "roundaboutness". Check out Hayek's comments in the article from earlier this week, "Hayek on the Paradox of Saving." In that article, Foster and Catchings made a similar mistake. Roundaboutness is not just an increase in capital intensity whereby new capital simply increases the number of the same processes using the same technology. An increase in roundaboutness uses greater amounts of capital but it does so by moving work from labor intensive to capital intesive processes, or employing new, more efficient processes. As Hayek points out, roundaboutness must produce more goods with less labor, otherwise the labor supply will limit the output unless there is surplus labor to go with the new capital investment. So the Austrian understanding of roundaboutness does not have a limit.

  Carson: "And the ideal level of capital-intensiveness tends to rise with market area, so anything that makes distribution artificially cheap will also make more capital-intensity and a higher degree of division of labor artificially profitable compared to the alternative."

  I don't understand the reason for the insertion of "artificiality." What does that have to do with anything? Nevertheless, more capitalistic means of production always reduce the per unit cost of ouput compared to more labor intensive methods, all other factors being equal. That's why producers have migrated to more capitalistic methods for the past 600 years or more. The size of the market is important to a business person, but cost is a major determinant of market size. As Henry Ford demonstrated, more capitalistic methods of production can dramatically reduce costs and increase the size of the market for a product.

  Carson: "Money inflation will also make artificially profitable a greater degree of roundaboutness or capital-intensiveness than would prevail in a free market. The Austrians call it malinvestment, but it's essentially the same as what neo-Marxists call overaccumulation."

  Money inflation causes more capitalistic production only in the short run. Austrian econ shows why that is the case and why it causes huge fluctuations in capital intensive industries, which is the business cycle. But the same money inflation that launched a thousand ships eventually sinks all of those ships, too. So in the long run, i.e., over the full business cycle, money inflation washes out and causes no net increase in production.

  PM: "...although labour content does not confer value, in a reasonably sound economy and subject to a sliding scale it indicates it..."

  I don't completely understand what you wrote, but in general I agree. However, what you wrote is not the labor theory of value. It's more like the idea that labor determines prices to a large degree. The labor theory of value tries to create an objective standard for determining the real value of a product. Classics like Smith thought that there should be an objective way of determining value, and he used labor. As a result, the market price of an object could differ significantly from its real, intrinsic value, which is supposed to be determined by the labor that went into producing it. Karl Marx latched onto that idea and ran with it, adding the idea of surplus value, which is the difference between the market price of the product and the price of labor. In Marx's view, if the value of a thing is the labor that went into it, then labor should get all of the market price. Since labor didn't get the full price, those who got the "surplus value" were thieves stealing from labor.

  
  

  Published: January 11, 2008 11:08 AM

• newson

  to tokyo tom:

  if you follow the posts from where the thread morphs from ricardian comparative advantage in the stables, to the broader debate on the industrial revolution, you'll see your point has been covered from differing angles.

  Published: January 11, 2008 11:20 PM

• newson

  to carson:
  i don't have any problem with there being an optimal level of capital-intensiveness at a given time. here's a bit i grabbed from gerry jackson at brookesnews.com which illustrates why new (and better) technologies don't always get implemented, or only over time:

  "there always exists a range of new techniques and inventions which are more productive then the currently employed ones. What should be asked is why these techniques are neglected’.

  The answer would be obvious to any businessman. In order to invest in these techniques and inventions businesses would have to scrap their present capital combinations in which a great deal has already been invested. Scrapping this investment in favour of new investments would impose losses on businesses The Bessemer process is a good example of what I mean. This revolutionary steel making process was invented in 1854 in Britain and within a short time massive investments were made in the process.

  However, in 1864 Frederick Siemens invented the open-hearth method which was superior to the Bessemer process. By about 1901 steel production from the Siemens method exceeded production from the Bessemer process. So why did steel makers who had invested in the Bessemer process still stick with it after the after the Siemens method had long proved itself the superior technique?

  (I still remember a couple of my university lecturers arguing that the Bessemer case was an example of the refusal of nineteenth century British businessmen to take risks. How these businessmen were supposed to predict the advent of Siemens’ invention is something these lecturers never revealed to us students).

  It is very simple, really. The Siemens method wasn’t sufficiently economically superior enough to warrant the immediate scrapping of Bessemer investments. Those who lament this situation do not realise that businesses have to make decisions according to current and expected costs and revenues. The rate of return from investing in the Siemens method would have had to exceed the return from the Bessemer process by such a margin that the difference between their costs of production per unit of steel times the yield would have had to be big enough to make expenditure on the open hearth method worthwhile.

  Put it another way. Old investments will be scrapped when the superiority of the alternative investment is great enough to compensate for the expenditure it requires. The Siemens method did not fit this bill. This made it preferable to operate with the obsolete Bessemer process until it was time to replace it or until the alternative method fell far enough in price to justify investing in it. The same really holds for any investment."

  as this snippet makes clear, using antiquated modes of production until the profitability gap between the old and the new becomes so wide as to justify the change makes perfect economic sense. i see no clash with austrian economics whatsoever, here.

  read the stromberg article; in relation to the "crack-up" boom marxian parallels, which part of marx are you alluding to?

  Published: January 11, 2008 11:45 PM

• newson

  to pm lawrence:
  engineering is not my forte, so your analogies weren't immediately clear to me. i'll have to mull over them.

  on a more banal level, the african example of the ltv makes sense. the more primitive an economy, the greater the value of sweat, and so the labour component would necessarily be the weightiest part of value. but even in a primitive setting, there are lacuna in the ltv - just one that comes to mind is the witch-doctor, who can demand "market rates". not strictly a sweat.

  mozart obviously had to practice his scales, and picasso likewise had to learn rudimentary brush-work; only in developed economies does the fork between labour (as sweat) and inspiration/intellect or otherwise rare personal attribute really widen dramatically.

  Published: January 12, 2008 12:12 AM

• P.M.Lawrence

  Newson, the following may or may not help you get started. Consider a process with a parameter that yields according to this table:-

  Output: 21 26 29 30 29 26 21

  Parameter: 5 10 15 25 30 35 40

  (I hope this is WYSIWYG enough that the table comes out properly.) The optimum comes with parameter 25, and output drops off to either side - but not linearly, rather it drops off ever faster as things get farther from optimal. Conversely, small variances aren't very important. Now, that table was made up for purposes of illustration, but it's fairly typical behaviour for most performance curves because it would take weird underlying structure to behave any other way (it's a mathematical/physical thing).

  The African poll tax examples didn't relate to their underlying economics, rather the cash economies were constructed in a way that reflected labour content in the fiat currency. If the USA were occupied by a conqueror that chose to issue a fiat currency in that way, the same would apply there - but it would be a wasteful use of resources. Which might be the point, if the conqueror wanted to run US military-industrial capacity down using its own resources to do it. The African cases were starting at the other end, aiming to transition from unsophisticated subsistence economies to ones more useful from a colonial policy point of view (e.g. better markets for the home country, less of a drain on the home treasury for administering and garrisoning, and more resources coming out for home industry more cheaply - but colonies were almost always cost centres even after improvements).

  Interestingly, I recently read an article in the Australian Financial Review that claimed that the Soviet command economy didn't suffer so much from the "calculation problem" as from a reluctance to replace plant as it became obsolescent if it was still working, which was in turn a consequence of state industries being monopolies.

  By the way, the original Bessemer process didn't work. Bessemer just got lucky in the ore he used, that had a blend that was capable of being processed. When he released the technology (licensed? sold? I'm not sure), his customers couldn't make it work. It took a lot more development and research to find the problem and how to blend ores and add cleansing materials to fix it. If he hadn't got lucky with his first go, there would have been a long struggle with no money coming in and no certainty of ultimate success; the Bessemer process might never have gone into production. One of the advantages of the open-hearth method was that it was less sensitive to materials that way - if you used a lot of scrap steel as input. It too would have had trouble getting going if it had been the first entrant, for want of scrap steel.

  Published: January 12, 2008 2:35 AM

• newson

  to pm lawrence:
  when you say -
  "poll taxes work unevenly because people's opportunity cost of time (a proxy for the "value" of their labour) varies; that's why poll taxes worked better with sliding scales, and why hut taxes were often used instead."
  - i think you're conferming the austrian view of value, ie subjective, regardless of whether it's measured in man-hours or currency. if it were a genuine money, then it is just a personal tax story, with only those not able to pony up the cash obliged to render service in lieu.

  i'd be interested to see that afr article - do you recall the date? i cannot see how any decision to implement new technology could be performed in the absence of rate of return calculations. as the bessemer/siemans snippet showed, mere technical obsolescence is not enough to justify plant/process replacement, it has to be seen in relation to payoffs.
  i think mises' calculation argument is still the last word on why socialism (perhaps best illustrated in the early part of the ussr under the bolsheviks) is unfeasible.
  

  Published: January 12, 2008 7:50 AM

• Inquisitor

  The calculation problem only comes into full effect in a world devoid of market prices, so although it applies to the USSR, it probably wasn't the main deficiency exhibited by the Soviet economy.

  Published: January 12, 2008 7:54 AM

• newson

  though from memory the 1919-21 period under the bolsheviks was an experiment to run things without the guide of prices. unless i'm dreaming, this plunged the country into total caos, and from '21 onwards, the price mechanism remained, albeit in a highly constrained form. just prolonged the agony.

  Published: January 12, 2008 8:21 AM

• Inquisitor

  To my knowledge that's correct. The USSR apparently drew on prices from abroad when it implemented its pseudo-price system, so that at this stage the calculation problem would most likely fade somewhat in its importance. The calculation problem essentially is in reference to a socialist commonwealth, a world without prices - that is when it becomes worst, and that is when Mises intended for his argument to apply in full, as far as I know.

  Published: January 12, 2008 8:54 AM

• P.M.Lawrence

  Newson, I don't recall the precise date or even author of the AFR piece, but it was within the last week or possibly two.

  Lenin slackened off the full Bolshevik system in face of problems, bringing in his New Ecomic Policy in the early '20s that allowed private market activity, but this was purely tactical; it was tightened up again after that. I have somewhere heard a remark attributed to Kruschev that once they won they would have to allow some small country like Switzerland to keep going in the old ways to provide them with price references.

  However, all through the USSR's life people kept carrying out private non-market activity to keep body and soul together, e.g. maintaining personal vegetable plots and feeding their own pigs on cheap (heavily subsidised) bread - it paid better to feed them processed food than to use genuinely more economical feeds. It was the presence of this genuine pool of private resources in the '90s that stopped the spurious "market" but really non-market shock treatment reforms from completely devastating the Russian people.

  One hybrid economy works quite well, from certain points of view: a "palace economy", which has a large pool of subsistence activity carrying a relatively small command economy. The USSR succeeded better to the extent it did this - and so did the spurious reforms.

  Published: January 12, 2008 9:56 PM

• P.M.Lawrence

  I've found a description of a specific case of colonialists introducing a Poll Tax to mobilise local resources. It's only atypical in that the colony had a partly developed economy already, particularly around the capital, and that there had been widespread slavery which the colonialists abolished, leaving a gap in the workforce.

  The following is drawn from Sonia E. Howe's The Drama of Madagascar, pp 331-2, and describes measures in the late 1890s soon after the French took over:-

  "There was the introduction of equitable taxation, so vital from the financial point of view; but also of such great political, moral and economic importance. It was the tangible proof of French authority having come to stay; it was the stimulus required to make an inherently lazy people work. Once they had learned to earn they would begin to spend, whereby commerce and industry would develop.

  "The corvée in its old form could not be continued, yet workmen were required both by the colonists, and by the Government for its vast schemes of public works. The General [Gallieni] therefore passed a temporary law, in which taxation and labour were combined, to be modified according to country, the people, and their mentality. Thus, for instance, every male among the Hovas [the dominant tribe of the earlier independent kingdom], from the age of sixteen to sixty, had either to pay twenty-five francs a year, or give fifty days of labour of nine hours a day, for which he was to be paid twenty centimes [presumably per day], a sum sufficient to feed him. Exempted from taxation and labour were soldiers, militia, Government clerks, and any Hova who knew French [many knew English, from missionary activity], also all who had entered into a contract of labour with a colonist. Unfortunately, this latter clause lent itself to tremendous abuses. By paying a small sum to some European, who nominally engaged them, thousands bought their freedom from work and taxation by these fictitious contracts, to be free to continue their lazy, unprofitable existence. To this abuse an end had to be made.

  "The urgency of a sound fiscal system was of tremendous importance to carry out all the schemes for the welfare and development of the island, and this demanded a local budget. The goal to be kept in view was to make the colony, as soon as possible, self-supporting. This end the Governor-General succeeded in achieving within afew years.

  "Meanwhile the readiness with which taxes were paid was the best proof of their being fair and just [some inconsistency with the 'abuse' here, surely? plus, being a tax enforcer would have been a plum job for any comprador]. What decidedly encouraged the new tax-payers was the fact that their money was being spent locally, and for their own benefit.

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  "... the Governor-General, assisted by his staff, let these public works be put in hand, 'in order to enable France to get some gain out of her new possession' [shows what the locals knew about 'for their own benefit' - 'what have the Romans ever done for us? I mean, apart from building all those roads and aqueducts' - it's like expecting the Scottish Highlanders to be grateful to Marshal Wade for building all those bridges that helped control them, and he used his own troops for that]."

  Published: January 17, 2008 6:08 AM

• Inquisitor

  Wow, talk about arrogant. Does the author actually believe everything they wrote or were they just conveying the mentality of the time?

  Published: January 17, 2008 12:42 PM

• P.M.Lawrence

  If "they" means who the writer is reporting in indirect speech, then certainly they believed all that. But if "they" is an ungrammatical Americanism for "she", then she believed it at one level - the level in which it accurately describes the objective facts of native reluctance to work, etc. - but context from other parts I didn't quote shows that she was well aware of the French agenda for territorial gain that hadn't been shared by the British, for Madagascar at any rate. For instance, the French were puzzled by how their advances weren't as well received, and she points out that the French were blind to the fact that the natives saw those as a stalking horse for taking over but didn't see that from the British. She also points out that Gallieni was guilty of a "diplomatic inaccuracy" when he made an announcement that the Queen had retired "at her own request".

  The thing is, the French not only believed those things that the author reports, they never questioned or examined their own assumption that the changes they were bringing, the "mission civilisatrice", were (a) good as an absolute and for both the French and the natives, and (b) justified the taking over (other changes included abolishing slavery, for instance). The author, as a creature of her times (writing in the late 1930s) probably agreed with (a) but reserved judgment on (b). That is what gives the pejorative tone to the language, which was probably simply copied from French sources and then edited. And, of course, regardless of the tone, it does describe how most subjugated peoples behaved, along with their attitudes. There was no work ethic, particularly since hard work was associated with slaves and hegemonised tribes, but there wouldn't have been anyway without valuable returns from work. The French just never saw that as a natural and proper response to conditions, but rather something calling for change to values they saw as absolutes.

  Published: January 17, 2008 11:53 PM