Keynes Versus Darwin
The new economy has a limited warranty.
Writing in 1830, the great Whig historian Thomas Babington Macaulay challenged the pessimists of his time to show why he should not expect the next century -- to 1930 -- to be as successful as the previous hundred years had been. He wrote: "If we were to prophesy that in the year 1930 a population of fifty millions, better fed, clad and lodged than the English of our time, will cover these islands... that machines constructed on principles yet undiscovered will be in every house, that there will be no highways but railroads, no travelling but by steam... many people would think us insane. We prophesy nothing; but this we say: If any person had told the Parliament which met in perplexity and terror after the crash in 1720 [the South Sea bubble] that in 1830 the wealth of England would surpass all their wildest dreams... that men would be in the habit of sailing without wind, and would be beginning to ride without horses, our ancestors would have given as much credit to the prediction as they gave to Gulliver's Travels...."
Writing in 1830, the great Whig historian Thomas Babington Macaulay challenged the pessimists of his time to show why he should not expect the next century — to 1930 — to be as successful as the previous hundred years had been. He wrote: "If we were to prophesy that in the year 1930 a population of fifty millions, better fed, clad and lodged than the English of our time, will cover these islands… that machines constructed on principles yet undiscovered will be in every house, that there will be no highways but railroads, no travelling but by steam… many people would think us insane. We prophesy nothing; but this we say: If any person had told the Parliament which met in perplexity and terror after the crash in 1720 [the South Sea bubble] that in 1830 the wealth of England would surpass all their wildest dreams… that men would be in the habit of sailing without wind, and would be beginning to ride without horses, our ancestors would have given as much credit to the prediction as they gave to Gulliver’s Travels…."
In exactly 1930, John Maynard Keynes extrapolated this triumphal view into another century. He argued that "mankind is solving its economic problem," that "the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is today," and that "assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years" and is not therefore "the permanent problem of the human race."
Both Macaulay and Keynes were, or are in process of being, vindicated by the achieved rise in living standards. Indeed, the Whig theory of history — that progress is inevitable, linear, and especially entrusted to the Anglo-Saxon races — enjoyed a powerful revival in the approach to the millennium. We are now given to understand that humankind has definitively solved its economic problem.
According to this new optimism, the "new economy" is a surefire perpetual-motion machine that not merely has repealed the business cycle but also offers the prospect of indefinitely prolonged prosperity for all in a liberalized global economy. Only fools, fogies, spoilt kids, and unrehabilitated lefties who still "just don’t get it" stand in the way. So, why should we not predict yet another hundred years of uninterrupted economic progress?
At the end of my recent survey of economic history from the agricultural revolution about 12,000 years ago to date, I conclude that such "they-all-lived-happily-ever-after" bunkum is profoundly unhistorical. Even if we exclude threats from beyond the province of the economic historian, such as a new Black Death, asteroid collision, or radical instability in human genetic composition, several kinds of threats could derail our progress toward permanent emancipation from the struggle for subsistence.
For a start, there is the natural political antithesis of the economic thesis, namely that the greater and better the economic opportunity, the fiercer and more threatening will be the challenge from those who are excluded from it. Then there is the vulnerability of the new paradigm itself to all kinds of now familiar malfunctions, including inflationary mismanagement of currencies, violent fluctuations in business and financial confidence, and the monopolistic tendencies of a laissez-faire world, especially where, as in the knowledge industries, the costs of supplying an extra customer are nil, and therefore the incumbent "big boy" can drive out lesser competitors and new entrants.
But there are yet deeper reasons to be suspicious of the happy-ending view of human history. For to escape altogether from humankind’s economic problem would amount to a permanent suspension of Darwinian pressures uniquely for our one species. Is that possible?
Many demographers believe that the global population is probably stabilizing at a level that is clearly not beyond — or anywhere near — the limits of habitable space or prospective food supplies. However, for a whole species (seemingly one of the most successful in evolutionary terms in the 600 million or so years of life on earth) suddenly and voluntarily to cease to press against the limits of its environment would seem to require a suspension of the natural order.
Even in the short term, the recent response of women to rising living standards — to slow their own fertility down to mere replacement rates — may not be stable or permanent. Fashions in such matters, and ethical systems, may seesaw.
Beyond the short term, there are the basic forces behind the models drawn from the work of Charles Darwin and Thomas Robert Malthus: namely, in Darwin’s case, that those who opt out of the evolutionary competition will be outflanked by those who stay in the game and, in Malthus’s case, that reproduction (at any rate greater than replacement) is a geometric progression, while environmental support for a species — food and the rest — may increase only arithmetically, and only until it collides with the rest of nature.
Knowledge and investment to sustain such exponential growth may effectively be limitless. An unknowable future may even throw up answers to many, perhaps all, of the problems of sustainable supplies, from potable water to genetic diversity. But the planet’s capacity to absorb waste without cumulatively harmful consequences no longer appears boundless.
Drastic changes in our physical global environment will probably occur within decades rather than centuries, let alone millenniums, if humankind continues to generate emissions of the kind, on the scale, and at the rate of growth currently associated with energy use in advanced economies and in those other highly populous economies, such as India and China, that are determined not forever to be denied American and European standards of living.
If for the first time we are approaching a real limit, that is an answer to Macaulay’s question why we should not expect the future to be as full of progress as the past. In this view, the past, or at least that part of it since 1700 that has commanded the enthusiasm of Macaulay and the optimists, may have simply been using up a once-and-for-all scope for demographic and economic growth that depends on the generation of unrecycled and cost-free (to its creator) waste. We cannot be sure that this view is wrong, even if we agree with Adam Smith that "there is an awful lot of ruin in a nation" and a fortiori even more ruin in a globe.
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