Wednesday, March 21, 2012

America: Crossing the Line

The struggle between Northern and Southern models of human ecology in nineteenth-century America, the theme of last week’s post, determined more than the shape of American continental expansion. The South followed what was becoming the standard pattern in the non-European world during that century, focusing on the production of commodities that were traded on global markets to pay for manufactured goods from European factories. That’s what the South did with cotton, tobacco, and a variety of lesser cash crops, and it’s also what British North America (that’s Canada nowadays) was doing at that same time with grain, lumber, fish, and the like.

Had the South kept the dominant position it originally held in American national politics, and arranged the nation’s trade policy to its own satisfaction, that’s what would have happened between the Mason-Dixon line and the Canadian border, too. Without the protection of tariffs and trade barriers, the North’s newborn industrial system would have been flattened by competition from Britain’s far more lavishly capitalized factories and mercantile firms. The products of America’s farms, mines, and logging camps would have had to be traded for hard currency to pay for manufactured products from overseas. That would have locked the United States into the same state of economic dependency as the nations of Latin America, where British banks and businesses—backed whenever necessary by the firepower of the Royal Navy—maintained the unequal patterns of exchange by which Britain prospered at the rest of the world’s expense.

That possibility went whistling down the wind once the rising spiral of conflict between North and South exploded into war. Southern opposition to trade barriers was no longer an issue once Southern congressmen packed their bags and went home in 1860; with that difficulty out of the way, Northern industries got the protection they needed, and the requirements of the war poured millions of dollars—yes, that was a lot of money back then—into Northern factories. The North’s total victory put the seal on the process, and not incidentally put paid to any lingering thoughts of regime change in America that might have been aired in private among Europe’s upper classes. Prussian general Helmut von Moltke could glare though his monocle and claim that the American Civil War consisted of “two armed mobs chasing each other around the country, from which nothing could be learned,” but a great many others paid close attention, and blanched.

If the powers of Europe needed any reminder of these issues, it came in 1867, when the short-lived French colonial regime in Mexico was terminated with extreme prejudice. That’s another of those bits of history remembered by nobody north of the Rio Grande and everybody south of it, and it deserves discussion here for reasons that will quickly become apparent to all of my readers who have been watching the situation in Greece. The short version is that banks in Britain, Spain and France loaned large sums of money to the government of Mexico, which then fell on hard times—there was a civil war involved, the Guerra de la Reforma, which is a bit further than Greece has gotten yet—and had to suspend payment on its debts. The British, Spanish and French governments responded by putting pressure on the Mexican government to pay up; this being the 19th century instead of the 21st, that took the form of military intervention.

The British and Spanish forces were willing to settle for cash, but the French emperor Napoleon III had a wider agenda and launched a full-scale invasion. After more than a year of heavy fighting, the French army controlled enough of the country to install a friend of Napoleon’s, an Austrian prince named Maximilian, as Emperor of Mexico. That’s one of several good reasons the Union forces in the Civil War threw so much effort into seizing the Mississippi valley in the first part of the war; Napoleon III was known to be sympathetic to the Southern cause, and so any land route by which he could get money and arms to the main Confederate armies and population centers had to be sealed off. As soon as the Civil War ended, in turn, toppling Maximilian’s government became a top priority for the United States government; money and arms poured south across the Rio Grande to support guerrillas loyal to Mexican president Benito Juarez, while the French came under heavy American pressure to withdraw their forces from Mexico. Napoleon III pulled his troops out in 1866, and a year later Maximilian got marched out in front of a Mexican firing squad. That was the last time any European power attempted to expand its holdings in the New World.

North of the Rio Grande, though, the potential for further conflict was hard to miss. It’s a commonplace of history that the aftermath of a war normally includes quarreling among the victors, since all the disagreements that had to be kept at bay while there was still an enemy to defeat typically come boiling up once that little obstacle is removed. That’s what happened across the North in the wake of the Civil War, as the loose alliance between industrial and agrarian interests began to splinter about the time the last of the confetti from the victory celebrations got swept up. Alongside the ordinary sources of economic and political disagreement was a hard fact better understood then than now: the farm states of the Midwest were unwilling to accept the unequal patterns of exchange that the industrial states of the East required.

To make sense of this, it’s necessary to glance back at Alf Hornborg’s analysis of industrial production as a system of wealth concentration. To build and maintain an industrial system takes vast amounts of capital, since factories don’t come cheap. All that capital has to be extracted from the rest of the economy, placed in the hands of a few magnates, and kept there, in order for an industrial economy to come into being and sustain itself. That’s why, in a market economy, the technological dimension of industrialism—the replacement of human labor with machines—is always paired with the economic and social dimension of industrialism—the creation of unequal patterns of exchange that concentrate wealth in the hands of factory owners at the expense of workers, farmers, and pretty much everybody else. The exact mechanisms used to impose and maintain those unequal exchanges vary from case to case, but some such mechanism has to be there, because an economy that allows the wealth produced by an industrial system to spread out through the population pretty quickly becomes an economy that no longer has the concentrated capital an industrial system needs to survive.

That’s the problem the United States faced in the latter third of the 19th century. The rising industrial economy of what would eventually turn into the Rust Belt demanded huge concentrations of capital, but attempts to extract that capital from the farm states ran into hard limits early on. The epic struggle between the railroad barons and the Grange movement over shipping rates for farm commodities made it uncomfortably clear to the industrialists that if they pushed the farm belt too far, the backlash could cost them much more than they wanted to pay. During the Reconstruction era, the defeated South could have what was left of its wealth fed into the business end of the industrial wealth pump, but that only worked for so long. When it stopped working, in the 1870s, the result was what normally happens when the industrial wealth pump runs short of fuel: depression.

They called it the Long Depression, though you’ll have a hard time finding references to that term in most economic texts these days. The first warning came with a spectacular stock market crash in 1873. The US economy faltered, struggled, then plunged into full-scale deflation in 1876 and 1877. There were plenty of ups and downs, and some relatively calm years in the 1880s, but a good many economic measures stayed on the wrong side of the scale until better times finally arrived in 1896.

There’s one good reason and at least three bad ones that you won’t hear much discussion of the Long Depression in today’s troubled economic time. The good reason is that most of today’s economic theories came into being in response to a later crisis—the Great Depression of the 1930s—and the desire to avoid a repeat of the ghastly consequences of that latter collapse has inspired a certain amount of tunnel vision on the part of economic historians. The bad ones? Well, that’s a little more complex.

Many of my readers, to begin with, will have heard pundits insist that economic crises happen because modern currencies aren’t based on a gold standard, or because central bankers always mismanage the economy, or both. That’s a popular belief just now, but it’s nonsense, and it only takes a glance at American economic history between the Civil War and the founding of the Federal Reserve in 1912 to prove once and for all that it’s nonsense. The Panic of 1873, the Long Depression, the Panic of 1893, the Depression of 1900-1904, the Panic of 1907, and several lesser economic disasters all happened in an era when the US dollar was on the strictest of gold standards and the United States didn’t have a central bank. That’s bad reason #1: once you discuss the Long Depression, most of the rhetoric backing a very popular set of economic notions pops like a punctured whoopee cushion.

More broadly, across nearly all of the squabbling theological sects of modern economic thought, Adam Smith’s belief in the invisible hand remains glued in place. Smith, as longtime readers of mine will recall from an earlier series of posts, insisted that a free market economy is innately self-regulating, as though controlled by an invisible hand, and tends to maximize everybody’s prosperity so long as it’s left to its own devices. Exactly how much leeway should be left to the invisible hand is a matter of much disagreement among economists. There’s a broad spectrum from the Keynesians, who want government to cushion the market’s wilder vagaries, to the Austrian school, which insists that whatever the market does by itself is by definition right, but you’ll have a hard time finding anybody in the economic mainstream willing to consider the possibility that the market, left entirely to itself, might dive into a depression twenty-three years long. That’s bad reason #2; once you discuss the Long Depression, it becomes very hard to ignore the fact that an economy left to its own devices can dole out decades of misery to everybody.

Then there’s bad reason #3, which is that the cause of intractable problems like the Long Depression was well understood at the time, but nobody wants to talk about it now. That unwillingness, in turn, reflects the way that a concept once very widespread in economics—the concept of overproduction—came to be associated with a single economic school or, even more precisely, with a single economist, Karl Marx. Overproduction is one, though only one, of the elements Marx wove into his system of economic ideas, and generations of Marxist theorists and publicists used it as a reason why capitalist economies must eventually collapse; with the inevitability of Pavlov’s drooling dogs, capitalist theorists and publicists thus automatically shy away from it; and the Long Depression makes it excruciatingly hard to shy away from it.

For all that, overproduction’s easy to understand, and it offers a crucial insight into how industrial economies work—or, more precisely, how they stop working. An industrial system, as we’ve discussed already, rely on unequal patterns of exchange that extract wealth from the many and concentrate it in the hands of the few, to provide the capital concentrations needed to build and maintain the industrial system itself. The way this usually works in practice is that whatever the people on the losing end of the exchange have to exchange—whether it’s the labor of a work force, the raw materials of a foreign country, or what have you—is given an artificially low value, while the products of the industrial system have an artificially high value, so the people on the losing end get a pittance for their labor, their crops, and so on, while high prices for industrial products keep the factory owners rich.

The problem, of course, comes when the people who are getting next to nothing for their labor, crops, and so on are also the people who are supposed to buy those expensive industrial products. As the people on the losing end of the exchange get poorer, their ability to buy industrial products goes down, and unsold products pile up in warehouses. What happens next puts the entire system at risk: if the factory owners cut prices to move product, they risk dispersing the concentration of capital they need to keep the system going; if they cut production and lay off workers, they decrease the number of people able to buy their products even further; there are other options, but all of them add up to serious trouble for the industrial wealth pump.

That’s overproduction. In the Long Depression, as in the Great Depression, it was an everyday reality, driving, severe deflation and high unemployment, and we’d still be talking about it today if Marx hadn’t been turned into an intellectual figurehead for one side in the bare-knuckle brawl over global power that dominated the second half of the 20th century. There’s much to be said for talking about it again, since it’s becoming an everyday reality in America as we speak—we’ll be exploring that in more detail in later posts—but it also needs to be factored into any understanding of the rise of America’s global empire, because the decision to go into the empire business in a big way was driven, in large part, by the overproduction crises that pounded the American economy in the late 19th century.

Read the literature of empire from the Victorian period and the connection is impossible to miss. Why did industrial nations want imperial colonies? The reason given in book after book and speech after speech at the time is that the industrial nations needed markets. Free trade rhetoric, then as now, insisted that all an industrial nation had to do was to build a better mousetrap and the world would beat a path to its door, but then as now, that’s not how things worked; the markets that mattered were the ones where a single industrial nation could exclude competitors and impose the unequal exchange of cheap labor and raw materials for expensive manufactured products that would keep the wealth pump churning away.

That was the option that faced America as it approached the beginning of the 20th century. It says something for the influence of ideals in American public life that this option wasn’t chosen without a fight. The debate over an American empire was fought out in the halls of Congress, in the letters pages of hundreds of newspapers, in public meetings, and any number of other venues. Important politicians of both major parties opposed imperial expansion with every resource and procedural trick they could muster, and scores of cultural figures—Mark Twain was among them—filled the popular magazines of the time with essays, stories, and poems challenging the imperial agenda.

In the end, though, they lost. To a majority of Americans, the economic case for empire outweighed the moral and political arguments against it. By 1898, the pro-Empire faction had become strong enough that it could push the country into action; the annexation of Hawai’i and the Spanish-American War that year crossed the line and redefined America as an imperial power, launching it along a trajectory that would very quickly draw it into conflicts that generations of Americans had done their best to avoid. We’ll discuss that next week.

****************
End of the World of the Week #14

In apocalyptic belief systems, just as in baseball, you often can’t tell the players without a program, and it’s not at all uncommon for prophets of any given end-of-the-world prediction to provide helpful guides explaining which figure in contemporary public life ought to be identified with the Great Beast of Revelations or the equivalent. Life can get complicated, though, when competing prophets disagree about who corresponds with which legendary figure—and when the two sides of a savage political and religious quarrel end up accusing each other of being the Antichrist, it can be hard indeed to figure out who if anyone is on the side of the angels.

That’s what happened in the early thirteenth century when the Holy Roman Emperor Frederick II faced off against Pope Gregory IX. The popes and the emperors spent most of the Middle Ages getting into it over a galaxy of issues that even historians have trouble remembering nowadays, but Frederick was not your usual medieval emperor. His contemporaries called him Stupor Mundi, which more or less translates out as “the astonishment of the world;” he was fluent in six languages, ruled a ramshackle empire that extended from Sicily to Germany with a bit of Palestine thrown in for good measure, and carried out a successful crusade while excommunicated by the Catholic church, which in medieval terms was definitely a puzzler.

It was probably inevitable that Gregory IX would call Frederick the Antichrist—it was par for the course for thirteenth-century popes to use that timeworn label for the people on their enemies list—but not even a pope could get away with doing that to the Stupor Mundi. Frederick immediately had his public relations people—yes, medieval emperors had public relations people, or at least Frederick did—start churning out tracts proving that the real Antichrist was Gregory IX. The two of them continued along the same lines for years, filling the medieval equivalent of the media with colorful denunciations extracted from the usual parts of the Bible .

Still, Gregory never made a convincing Antichrist to anyone but Frederick and his friends, since he was simply a common or garden variety medieval pope, and spent his career in the usual way, fighting bloodthirsty wars against his personal enemies and issuing proclamations condemning Jews, heretics, and cats. Frederick was another matter; a great many people in his lifetime thought that there was a good chance the Stupor Mundi might just be the Great Beast after all. In his inimitable way, though, he surprised them all by suddenly dying of dysentery in 1250.

—story from Apocalypse Not

81 comments:

Leo said...

it seems like the basic state of economies is the non/low industrial distributed local/regional economies and the system tries to restore itself through various feedback loops to that style, but the fossil fuels we've gained access to have allowed us to keep out of that state as long as we expend them. I'd say a similar things happening now and the economic systems starting to reset itself.
also when i looked up the long depression it mentioned that europe (mainly britian)was also affected. similar reasons?

John Michael Greer said...

Leo, good. I'd put it a little differently -- the rise of an industrial economy is itself the result of a complex set of feedback loops involving fossil fuels and capital concentration, which sooner or later runs into diminishing returns and begins to unravel, returning to a state closer to equilibrium. How close? Depends on circumstances. As for the Long Depression in Britain, yes, the reasons were similar -- I suspect running up against a shortage of new sites for colonies had a lot to do with it.

Cherokee Organics said...

Hi John,

Over production. I've read that because of the downturn in the US and European markets, European luxury car manufacturers are starting to dump product here (I'm sure they would consider the word dump a bit harsh for their products!). Apparently there's never been a better time to buy.

Retail is quite sad here too, both in the press and anecdotally. This is indicative of the beginnings of a general downturn over here. This is despite general retail prices coming down, again because Chinese manufacturers have been dumping (there's that word again) excess product on the Australian retail market.

Plus, petrol is most recently at AU$1.55 / litre (that is US$1.62 at today's spot rate). In your US gallon terms that is the equivalent of US$6.12 / gallon (3.78 litres to a US gallon).

Surprisingly for me, house prices here have been very resilient, but I don’t expect that to last if unemployment continues to slowly creep upwards.

Respect to you for producing these posts as they would be quite difficult to research, write and field responses (I bet you’ve had more than your fair share of trolls).

Plus, you nicely side stepped the wealth concentration argument. Tidy work. Apparently over in the US, right now, wealth concentration is at levels not seen since the 1920's and we all know what happened then.

Yeah, wealthy people may buy luxury vehicles, but the population at large is kept fed through the small value high volume transactions that keep people employed.

The banks here are complaining about a lack of people to loan money to. At the same time though, they are shifting jobs overseas and sacking people here. Self-defeating really.

Also, just a random thought which I'll chuck out there: The wealth is now no longer being concentrated into the hands of the owners of the capital, but the Boards that control that capital. Not that it makes any difference to the end game though.

Many regards.

Chris

galacticsurfer said...

JMG
I didn't know much about Moltke'S famous comments on the civil war but googled it and it is all over the place. But I did find this:

http://www.history.army.mil/books/OpArt/germany1.htm

"To astute students of military history, Moltke’s name signifies far more than a list of nineteenth-century battles. He recognized that in the years to come wars would be conducted differently from the way they were in his lifetime: as short, quick, and decisive conflicts. Instead, he predicted correctly that future wars would be lengthy and total. Still others have observed his contributions to the application of emerging technologies to the conduct of operations. He evaluated the increased lethality and range of rifle and artillery fires and realized the necessity of changing basic military doctrine accordingly. He perceived that offense would give way to the preponderance of defense on the tactical level; in his view enemy attacks of the future were destined to be shattered by a wall of German tactical firepower. Moltke also foresaw that mobility on the strategic level could be multiplied by employing railroads. He planned to utilize this mode of transport to speed German armies to the battlefield and thereby to concentrate overwhelming force at the right time and in the right place to ensure victory. Finally, by applying the telegraph to warfare, Moltke was able to direct large armies in the field from great distances, thereby enhancing strategic flexibility through what he would refer to as operational direction."

This sounds more like US Grant than Napoleon so despite what the Prussians said they must have learned something.

Some other liinks.

http://www.cincinnaticwrt.org/data/articles/catton_cw_armies.html

http://h-net.msu.edu/cgi-bin/logbrowse.pl?trx=vx&list=h-war&month=0005&week=b&msg=zJcVMvxOMdeVm33rOHa8ag&user=&pw=

http://en.wikipedia.org/wiki/Prussia_in_the_American_Civil_War

www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA384203

I don't know how this Austrian Author Pohanka whose book I read (in German) could have made such a statement without mentioning the other standard evidence that says they ignored the Civil War despite all teh prussian generals and 30% german participation in the North.

russell1200 said...

Cinco de Mayo (5th of May) comes from the French incursion into Mexico. It celebrates victory of Mexican forces in a particular battle in that conflict. It is roughly analgous to our battles of Lexington-Concord.

A regional holiday in Mexico, it is celebrated nationally in the United States because of the promotion of a beer company. If I understand the use of terminology there correctly, we might say there is a little thaumaturgy at work there.
It is also an interesting example of one mechanism of modern empires.

Andrew B. Watt said...

Of course, it's easy to see from this week's post that the new business end of the wealth pump is here and in the developed world generally, and the factories and factory owners are in China — but we're currently in a state of overproduction. The Chinese are trying to keep enough people at work, but the housing bubble has assured that people are making do with what they have. There's a wrinkle in that the Chinese factory owners are paying for American design .... But they're also getting better at design themselves in the process. Of course no one wants to talk about overproduction ... it reveals just how ramshackle the American imperial project has become, and reveals that we've let the country be turned into a source of raw materials for someone else's wealth machine. Ooops.

In school yesterday I read an article about The Limits to Growth being 40 years old this month. There was a graph linked to the article, showing historical data trends against the book's predictions. Seems like we are right on track to go over Seneca's cliff.

Leo said...

so the rise of oil came at an end of a previous empire system (britain's) that was caused by the standard problems of industrialism, and allowed industrialism a second shot at life.
i assume the main circumstances determining how close to the equilibrium are infrastructure, technical knowledge and the remaining useful capital (iron bars as opposed to bonds).
i don't expect us to go straight back to the equilibrium but there isn't any easy way the problems of overproduction and others and don't see anyway of a transition to a more local/regional economy by the current system.
i expect a straight out sharp drop then a plateau as stuff is scavenged and retrofitted, is the immediate future as new forms appear.
what do you expect?

Odin's Raven said...

The Long Depression in Britain, which undermined farming and landowning, whilst bringing cheap food and industrial goods to the rapidly growing urban masses (and increasing power and prominence to rich industrialists at the expense of the traditional aristocracy), is usually attributed to free trade, railways and steamships bringing cheap food from North and South America and the Antipodes.

It's a quirk of history that whilst the armies of the two people most expected to give leadership to medieval Europe, the Pope and the Holy Roman Emperor, were fighting each other, the Mongols were only prevented from conquering all of Europe by the death of their Khan and the withdrawal of their forces whilst they chose a new Khan, who turned out not to be interested in resuming the campaign.

Robo said...

Thanks again for more of the stuff they never taught us in school. This puts Teddy Roosevelt's "Great White Fleet" into a better perspective.

It seems like we Americans have always needed to see ourselves as the guys with the white hats, no matter what imperial moves we might make. Most other empires seem to have been more content to simply see themselves as the big dogs of their time. We want to be the good dog too.

Jason said...

JMG: In the end, though, they lost. To a majority of Americans, the economic case for empire outweighed the moral and political arguments against it.

Simple question there: You argued at length last year that the seventies alt tech movement could have worked, but is wrongly remembered as an inevitable failure. How about this case? Could the anti-imperialists have won?

How about the future? Can industrial wealth concentration patterns be avoided in the post-industrial world?

phil harris said...

JMG
A marvel of compression: thank you.
Following on from your conversation with Leo, I checked Hobsbawm 'Industry & Empire'. He discusses the Great Depression 1873 - 1896 as a world-wide phenomenon. It was less dramatic in Britain compared with USA and Central Europe and had less impact on the British working class compared with earlier and later economic calamities, but Hobsbawm argues that during this period Britain was overtaken by the advancing economies of USA and Germany. He argues that by the mid 1890s Britain woke to find itself sharing the world; "one of three great industrial powers and in some respects the weakest of them". The opening of hitherto inaccessible areas of raw material and agricultural production by railroads and trans-ocean shipping had boosted the mid-19thC British industrial expansion, but this phase had then brought about the inevitable fall in prices. "Squeezed between the upper millstone of price-reducing competition and the lower [millstone] of increasingly expensive plant, with increasingly large and inelastic overheads, businessmen searched anxiously for a way out". Hobsbawm argues that Britain was left with "only one major way out": imperialism. Not a new thing for Britain, but the new factor in imperial expansion was the emergence of a competing group of industrially advanced powers. This was also the era of 'agitations' among both industrial and agrarian labouring and peasant populations, and the emergence of ‘socialist’ politics, but where we were all actually headed was toward the politics of world war on a new industrial scale. (Lessons indeed were learned from the American Civil War?)
NB. Hobsbawm was a major source for Stephen G. Bunker who was a long term colleague of Alf Hornberg. Personal note; my grandfather was born into the British working class in 1872.

Larry said...

My understanding of the present Chinese economy is that it's an economy of vast overproduction on steroids. Unlike here, where the fact of bankruptcy provides some check on over production, in China, since many of the manufacturers are state and/or party membered owned, when the firms can't pay their bills from revenues, they just borrow more money. The (state controlled) bank money, in terms, comes from the savings of the workers who reportedly save 30% or so of earnings despite wages of $2/hour or so. The inflation in China runs higher than the interest on the savings so that once a person has a certain amount, the new savings deposited is just to make up the loss on the existing savings from inflation.

Ceworthe said...

So, this Pope Gregory was responsible for helping out the plague by condemning cats (people dispatch the cats, rats have a population boom, and the accompanying plague does as well)
As far as the over production issue, it seems we as a species never get the idea that there are limit-to lands to take over and exploit, to people's ability to buy stuff (with a notable exception of Henry Ford realized he had to make Model T's affordable to those working in the plants), to oil, to how much pollution Mother Earth can absorb, etc., etc., etc.....

Ceworthe said...

We don't seem to get that life is a cycle, or a circle if you will, not a straight line. When you take, you have to give back, and if you take from something you can't give back to, well then you will hit a hard limit and it all collapses.

someone said...

Overproduction is indeed the one, basic, unsolved problem of capitalism. Producers (factory owners, corporations) will try to reduce wages and have less employees (or move production to Asia) in order to produce even more and thus be even more profitable; but exactly through these actions they reduce the purchase power of the populace, and the market for their products collapses.

I suspect that's the reason why the so-called "social market economies" as found in post-WW2 Europe and Japan are much more resistant to these crises of capitalism (i.e. the crises don't affect average people as much as in the US, for example). It's just a matter of redistribution of wealth. During boom times, this redistribution means less profits and a less dynamic economy, but during bust times the economy is more robust, i.e. more people keep their jobs and can still buy products.

It's probably no coincidence that the European economies (Germany, France et al) are still actually manufacturing things (machines, customer goods etc.) while the US, and to some extent the UK, have largely stopped manufacturing anything except "finance products". Still, even social market economies need fossil fuels, although they can probably cope better with high fuel prices as well, at least for some time.

BruceH said...

Interesting thoughts on the period between the Civil War and the turn of the century. To most Americans, I'm afraid, it is just a blur. Even more of a blur than the period between, say, Jefferson's presidency and the Civil War itself. That's what happens when history is taught as a sequence of wars.

Of course, in the 20th Century there were plenty of wars to focus on: WWI, WWII, Vietnam. It's harder to blur the periods in-between because they were shorter and more recent.

Part of the "blur" for me of the post Civil War period is: how did the Republican Party, which came out of the Midwest and was originally the party of the farmers, mechanics and merchants of that region, morph into the party of the big money capitalists?

RainbowShadow said...

Terrific post!

I enjoy your use of the concepts of artificially high and artificially low prices. I was wondering what words I should use to describe the behavior of certain figures I shall not name who angrily denounce the working class as lazy, even though the working class produces all our goods, while praising figures like Donald Trump or investment bankers as "hard workers" even though don't actually contribute goods and services.

I actually brought that up in a previous post, but was struggling to find the right words to name this phenomenon (a problem cannot be fixed if it isn't correctly diagnosed, after all, and Americans in particular are so caught up in "the meaning of life is beating everyone else to make the most money" that not everyone's willing to listen to diagnoses that would interfere with this supposed life goal).

You have NO idea how grateful I am right now. Thanks!

Cathy McGuire said...

Very interesting to see Manifest Destiny through the lens of wealth reallocation. It does make me dubious that the US will ever get its act together to prevent the system’s disintegration, since it seems like all parties are just “doing what comes naturally” – few see the overall destructive pattern. So… I better keep topping up my skills and supplies.

the people on the losing end of the exchange have to exchange—whether it’s the labor of a work force, the raw materials of a foreign country, or what have you—is given an artificially low value, while the products of the industrial system have an artificially high value,
The mining and logging camps were full of that kind of scam “I owe my soul to the Company Store…”. And I was just reading in the history of Seattle (that once tried to call itself New York, LOL) that for a while the local British outpost was trading one ounce of lead to the Indians for every ounce of gold they brought in – talk about unequal swaps! And of course the founders of Seattle saw all those “free” logs just standing around useless in the ground….

Aside: a sudden snowstorm has dumped 5-6” snow (nothing in winter, but now on 2nd day of Spring) on my part of the Willamette Valley, taking out power and even phone lines all day yesterday… and each time I realize how much I miss the simple conveniences…I of course had my woodstove for heat, coffee & soup, but lack of running water is so messy, and as I imagined melting the snow for wash water (as they did in olden times), I again appreciated how the weak must have died out much quicker and only the strong-backed had a chance to live well. Of course, it’d be better if I wasn’t using the JIT (just-in-time) method of wood chopping… ;-}

Arthur Vibert said...

I enjoy all your writing, but I'm particularly enjoying the current series. Today's post touched on a subject that I've often thought about when reading various bloggers when they insist that a return to the gold standard and unregulated free markets is the panacea for all our current economic ills. I would very much enjoy doing more reading on the subject of "The Long Depression" and the various panics and lesser depressions of the period. Can you suggest a good book or two? Thanks!

Peck's Bad Boy said...

"Over production" I think of the Moai of Easter Island.

Glenn said...

Pope Gregory issued an encyclical against cats? He's definitely on my short list for the anti-Christ then!

Glenn,
Marrowstone

PhilJ said...

JMG, I love all the history. A subject I flunked at school 'cos the history teacher told me he kept plugs in the electricity sockets to stop the electricity leaking out. (He wasn't joking!) This to a hobby electronicist, then 15 years old, wrote off every other single word he said.

Matt and Jess said...

Oooh, I'm really looking forward to this whole series! I'm interested in learning what the options were had the Imperialists not won, and wondering what the most optimistic outcome of this empire's collapse could be. Clearly I need to read much more about this. I've always enjoyed history though only outside of school.

escapefromwisconsin said...

Overproduction is usually fobbed off with Say's Law, which Keynes restated as "supply creates its own demand," i.e. the money from production gets paid to workers, whose demand for goods is insatiable. Say's Law is another vintage from the dawn of factory production in Adam Smith's time, and is cited even today to justify "supply side economics" to the masses. The depression set off by the Panic of 1873 was in fact known as the Great Depression until the 1930's

There was a movement that took overproduction seriously, as well as displacement due to automation - the Technocracy Movement of the 1930's. The Technocracy Study Course makes interesting reading and was mainly written by someone probably familiar to the readers of this blog - M. King Hubbert. The Technocrats were also heavily influenced by the now-forgotten economist Thorstein Veblen, who's worth checking into for insights into the evolution of American industry in ninteenth and early twentieth centuries. Unfortunately today he's only known for his idea of conspicuous consumption.

Although wildly off-topic, I couldn't help but post this:

Ox Carts and No Coffee Building a Monastery the Medieval Way (Der Spiegel)

prack45 said...

For those that think a gold or mineral standard would present a more stable outcome for industrial society should actually look back to a “Black Friday” that occurred in 1869 leading up to the Long Depression. The government started issuing some of the first “greenbacks” during the civil war and after for Reconstruction. In turn folks could turn greenbacks in for gold. Some of the original “Robber Barons” during this period would buy up government sold gold causing stocks to run low which would then require the government to later have to dump gold on the market causing large price swings. One of the many factors in the 1873 depression involved an oversupply of silver which occurred once Germany decided to no longer mint silver coins and a large price swing down followed, culminating in the Coinage Act of 1873. Just to cover the full popular metal spectrum, the 1907 panic got kicked off with an attempt to corner the market in a “copper” company. When this company’s stock nose dived due to human induced shenanigans, entities such as Montana state banks and various Trust companies throughout the country which controlled industrial finances’ collapsed.

It is a breath of fresh air to read something free of ideological pre-conceived notions that begins to delve into the deeper and darker aspects of an industrial empire economy. Most folks who advocate going back to a gold standard to shore things up totally miss the human greed factors that tend to drive an induempire (these words seem to fit together well) and also fail to recognize that there are a many of these rascals that will need a regulatory boot close to their neck no matter what standard is agreed upon.

Karim said...

Greetings all!

Excellent post about american economic history and its march to imperialism!

I have a question: given that industrialism is just a wealth pump to concentrate wealth in the hands of the few at the expense of the many that relies on abundant and cheap raw materials and energy, as we go down Hubbert's curve, it follows that industrialism is more or less doomed. Then to what extent can we hope to maintain an industrial base for certain manufactured goods that are rather useful like electric lights, optical lenses and refrigeration units?

William Hunter Duncan said...

This post somewhat reminds me of Joe Bageant's borderers, or the descendants of the Scots/Irish who were a perpetual trouble to the English, and more or less dumped here, who he described as a primary feedstock of the modern empire, it's most fervent supporters and willing fighters. I wonder now, about the drum roll for war with Iran, which seems to me a kind of insane self-fulfilling prophecy, equal parts religious dogma, and imperial inertia. It's like we can't go out without a boom.

www.offthegridmpls.blogspot.com

Brad K. said...

So the main reason that modern agribusiness is unsustainable, is that it treats the farm as an industry. Agribusiness intends to concentrate the wealth of relatively large amounts of farm ground into a few hands, behind a shield of tariffs and other government protections.

At the same time that the government protections for agribusiness are eroding, industries that serve agribusiness like seed and pesticide companies, are enjoying enormous government protections including patent enforcement and restrictive trade practices -- thus making essential agribusiness resources vastly more expensive.

The deflation of credit and uncertainty about regulations and laws make doing any business riskier and more expensive. Which puts additional pressure on agribusiness as a business model.

The looming downside, of course, is the fact that those same acres currently occupied by agribusiness operators could continue to produce under a more agrarian, local economy model. But the transition will consume generations of people and volumes of equipment, fences, and seeds that are being suppressed today to pander to crop seed industries.

Wow.

DickLawrence said...

John, thanks for the excellent history lessons, and the well-thought-out conclusions (coming) re. their applicability to today's conundrums, U.S. and global.

With "overproduction", you're heading into territory I've been wondering about for a few years: what happens, with industrial productivity rising steadily (over a century and more, it graphs out as an exponentially rising curve), when it only requires a small fraction of the labor force to make all the stuff we need? We've already done that with food and farming: from 90% of the population in farming (1800) to 2% (today), a tiny fraction of the population produces food for most industrialized nations. Then we thought industrial production was where it's at, and most of us would work in factories or related support industries. Well, guess what? with such enormous improvements in productivity (never mind most production moving to China), now only a small % of U.S. labor works in factories of any sort. Now it's "get a college eduction and write software, go to business school, it's the white-collar jobs, stupid!" to maintain reasonably full employment. You can see where this is all going: a small fraction of the population actually creates and grows everything the rest of us "need" (want, with the help of the huge advertising and marketing departments). But, we're not giving away food and HDTVs to those who aren't employed as farmers or factory workers. The rest of the employed population seems to be kept busy with "service" or invented careers like market analysts and prison administrators, fundamentally parasitic occupations that keep them out of trouble but don't actually produce anything used by the population.

I see this is all going somewhere, but it's hard to see how it all ends. Throwing in Peak Oil and all, probably not well - but would love to hear your take on it.

Dick Lawrence

prack45 said...

Just to follow up, I am not the biggest fan of the fed either. IMHO it seems that it was created to provide a centralized mechanism for wealthy industrialist group think, which in turn could help prevent a peer’s shenanigans from crashing the system, which occurred on a regular basis during the last half of 19th century. However the fed does not seem to address “overproduction” well and seems to in fact perpetuate it.

As we have moved down the road ever closer toward resource depletion, it appears to me that one subset of industrial empires along with large militaries is ever complex financial schemes that further loot resources and cause overproduction.

Not to get off topic, but on a positive note. Similar to Rome, Egypt, and Greece our descendents may be left with some massive quarries to pick from, due to “overproduction” in the form of major cities especially here in the US. Hopefully they will pick wisely.

beneaththesurface said...

JMG,

Taking advantage of a free day, I've been thoroughly working through all of the last five posts of yours (plus the comments), since I haven't been able to keep up recently. So thought-provoking. Your blog and the people who comment on it are truly a jewel I've found in the Internet world. The quality of discourse here surpasses the quality in most other places on the Internet.

I have chosen not to continue in the academic world since I graduated from college a decade ago, instead pursuing further education in an autodidactic fashion. I feel your blog has become a kind of long-term online course I'm taking though. As a small token of my appreciation for the work you are doing, I just contributed some money to help you continue this essential work.

Also, thanks for letting me know about the Age of Limits conference taking place Memorial Day weekend. I plan on attending and taking part in the conversation. I look forward to seeing you there!

-Rachel

DeAnander said...

When I think of "overproduction" I immediately think of "dollar store." These outlets for the manic overproduction of low-end Chinese industry are now ubiquitous in Canada. They smell of VOCs, aromatic polycarbons, raw plastic. They are stocked with a bewildering variety of (for the most part) poorly-made goods, some of them staggeringly unnecessary and *odd* -- cultural and kitsch objects from some kind of mainstream Anglo tradition, designed and manufactured by people who perhaps only ever saw a photograph of the original. [Like Japanese technical manuals translated crudely into English, much is lost in translation. For example, English words printed on many products don't make any sense, but are mere decorative detail.]

But above all this stuff is *cheap*. Astonishingly, troublingly cheap. That's why it's called a Dollar Store -- many items are $1, some are as much as $2 or $3. There are aisles of canned food at $1/can, many with labels that look "kinda like" some familiar N American brand but not quite. Poor people shop there out of need, wealthier people for the fun of "getting a bargain." I have bought things in these stores myself, but always with a strange guilty feeling; nothing can be this cheap and be manufactured with any kind of honesty or integrity. Somewhere behind that $1 item is slavery, chicanery, fudged books, malfeasance of some kind...

The container ships come over from China to Vancouver and Prince Rupert in endless procession. They bring incalculable mountains of this CCCC (Cheap Chinese Consumer Crap) every week. What goes back is true value: coal, grain, trees. Overproduction on the one hand, liquidation on the other. Mountains of disposable short-lifetime (mostly bloody useless) consumer crud in exchange for the most valuable things on earth: fossil fuel, food, timber. Who's selling Manhattan now for a handful of trade beads?

And from the dollar store it is only one small step up the food chain to Wal*Mart, and from there to Zeller's. Canadian Tire (now known as Chinese Tire or Crappy Tire to locals) is yet another dumping ground for the ever-growing mountain of cheap, cheap, cheap Stuff. Cheap Stuff that is costing us everything.

Archaeologists often analyze the quality of artifacts and tools as some indicator of the health and life-stage of cultures; the shoddiness of our present artifactual world, as well as its sheer insane quantity, seems like a bad sign. It also seems like a bad (certainly odd) sign that we can buy such fabulous, nearly magical discretionary gadgets as cell phones and iPads (whose quality and features seem to improve over time) but we can't make or buy practical stuff like a decent pair of pliers or a good pair of boots....

Kind of like the phood system (or cable tv for that matter): cranks out Product in gobsmacking quantity, but it's 99% crap... I don't have a coherent point to make really, just my general aghastness at living in this river of cheap crud (and knowing that elsewhere, literal rivers are being poisoned, drained, destroyed in the process of churning out the cheap crud). Maybe I should just have a T shirt printed to read "Hornborg Was Right" and leave it at that...

Jennifer D Riley said...

Offering a non-American point of view: know someone who lived in England during World War II who stated with conviction that America hadn't entered WWII that England would have fallen to the Nazis.

Perhaps you can discuss the "what if" Nazi-centric world view, as counter-point to America-centric, either here or in another venue.

One thought: does size of geography matter? does industrial, science, and engineering capacity matter equally?

Matt and Jess said...

escapefromwisconsin, I found that article very interesting, thanks for sharing. I was quite upset at the no coffee part, and hope only that the coffee trade endures through my last years. Other than that, I found it very interesting that they had so much interest from workers applying to help ... I think many people must feel a real need to do useful work with their hands.

If I can continue on with the unapplicable linking, I found a wonderful website that new gardeners may find useful: www.sproutrobot.com ... because we'll all be gardening much more soon! That tied it in to the empire I suppose.

wall0159 said...

One thing this series of posts springs to mind is what the future holds.
China has historically not been very interested in empire, and for the last 30 years has exhibited exceptional growth. This is now tapering off. Will this encourage them to do some empire building of their own? Perhaps there are already signs that this is occuring.
Troubling...
(note that I'm not China-bashing, and I hope they can continue to grow. But I do see empires as somewhat immoral, and don't want to see the formation of a new one)

John Michael Greer said...

Cherokee, house prices take their time to start falling. In the US, the props had already fallen out from under the housing market by late 2006, but the real plunge didn't get under way until 2008. Give it another year or two and a lot of real estate on your side of the planet will be, er, Down Underwater.

Surfer, Moltke wasn't the only general in Prussia! I suspect he said what he did because he was tired to death of hearing the Prussian General Staff rehash American Civil War campaigns for the umpteenth time.

Russell, the Battle of Puebla was a remarkable event, and worth a beer. Still, of course, you're right about thaumaturgy.

Andrew, for all the venom that's been flung at it, The Limits to Growth remains the most accurate model of where we've been and where we're going. It's not a compliment to human intelligence that the more accurate it proves to be, the more loudly people denounce it.

Leo, I'll be talking about that in quite some detail a little later on in this series of posts.

Raven, well, that's one set of proposed explanations.

Robo, exactly. Wasn't it Jacques Mitterand who made pointed comments about America's "nearly messianic sense of national mission"?

Jason, I tend to see historical events individually as contingent rather than necessary, though they take place in the context of broader trends that are difficult to buck. Thus I do think America could have turned away from empire -- but if we'd done so, we'd probably be a dependency of the German Empire today, since somebody was going to rise up as Britain fell.

Phil, it's been too long since I've read Hobsbawm! Thanks for the reminder.

Larry, that's certainly the story we get over here. I don't happen to know how true it is; with the US media, you simply can't tell.

Ceworthe, bingo -- Gregory's bull Vox in Rama, which linked cats to heresy, is credited by some with helping to prepare the way for the Black Death. As for the circle vs. the straight line -- well, some cultures get that; ours doesn't.

Adrian Ayres Fisher said...

Hi JMG,

Excellent series of posts and most thought provoking as I fit what you say into my own self-constructed version of American history, which is longer on environmental history than economic.

Somehow I feel there's a strong connection between overproduction and "growth," as in "we want to grow our way out of the recession": so growth crashes into the overproduction wall at a time when apparently markets aren't growing (despite population increases) and resources are depleting? So how is that suppose to work?

(And there can be overproduction of services as well as manufactured goods, right? We do seem to have something like that here in the U.S.)

Looking forward to next week's post.

Doctor Westchester said...

JMG,

I have been waiting for you to start this series for while and I must say that you have not disappointed.

I wonder about the concept of artificially high prices. My sense that this is not always so for the final product sold, at least in terms of sales price. DeAnander touches on this issue in his response. Often, at least in America, it is the use of artificially low prices that allows the industrial producer to insert his wealth pump into a society/community and dislodge the local alternatives. For the society/community the price is artificially low since 1) long term they are going get much poorer if they don’t have any wealth pumps working for them to counter the ones working against them and 2) besides this, the industrial producer is usually off-loading many of his costs somewhere (externalities, I think the economists call this), often on to consumers in some hidden ways. Think of Wal*Mart store workers would can barely shop at Wal*Mart and are on public assistance, for example.

I'm not saying that the cost of industrial goods are always artificially low, it's just pricing goods artificially low appears to one very common strategy, especially for mass market goods.

Of course, if by artificially high prices, you include all these factors indicated above, then yes the idea may be almost universally valid.

Robert Mathiesen said...

Jennifer D Riley wrote:

"Offering a non-American point of view: know someone who lived in England during World War II who stated with conviction that [if] America hadn't entered WWII that England would have fallen to the Nazis."

There was actually a third option being considered by Americans back then, namely, to enter WWII on the side of Germany. If we had done that, Germany (and we) would have almost certainly won the war, and we would all be living in a Nazi or post-Nazi world now.

My father was a young engineer at that time, a member of the Navy team that designed the Norden Bombsight, and he had a very high security clearance. So he was in a position to hear much of what was said on the subject. He told me what he had heard in 1960, right after I graduated from High School.

In short, he saw that opinion had been divided roughly into equal thirds: about one third of the people with whom he had contact favored neutrality, another third favored entering the war on the side of England -- and the last third favored entering the war on the side of Germany! Germany, after all, seemed to this third to have the best engineers, to make the best machines and machine tools, to have perfected the scientific method -- and to have had the good sense to follow our own American lead in matters of eugenics, the sterilization of the "unfit," and "racial science" in general.

He always thought that if the attack on Pearl Harbor had not happened, the US would finally have decided to support Germany in the war. It scared him to think what sort of a world that would have been for his children and grandchildren to have to live in.

DavidB said...

JMG, maybe this is what you're going to be getting at in future posts, but I was wondering what works you would recommend on this specific question of the history of energy and the rise of industrial capitalism? Especially the 19th century. Right on that cusp, where capitalism was in place but had yet to be really turbocharged by cheap energy inputs. Is there a lot of scholarship in this area? Canonical works etc.? Or is it under researched?

Among other things it's quite fascinating to me that Marx wrote precisely during this era. I've often wondered if his confidence in the demise of capitalism might have been borne out but for this unexpected infusion of high EROEI energy, overturning his whole model of how human labor (for him the sole source of surplus value/profit) would need to be concentrated to such an extent that it would grow more powerful than the capital that had brought it together. In a way not his 'fault' not to have anticipated that. One question is whether the peak oil-induced collapse scenario (stepwise or however) in a way places us back into Marx's pre-oil world, making his analysis more relevant with the energy 'distortion' removed.

Red Neck Girl said...

Matt and Jess said...
escapefromwisconsin, I found that article very interesting, thanks for sharing. I was quite upset at the no coffee part, and hope only that the coffee trade endures through my last years.

Wadulisi says:
I believe that not getting coffee would depend on where you lived. Along the coast you would be more likely to get coffee although it might be more of a luxury than a daily indulgence. My vice is tea and here in the Pac NW it would be easy to grow. In fact they did try to create tea plantations here but picking and preparing the leaves for the various varieties created is labor intensive. Not a good fit for an industrial nation but perhaps excellent trade goods in a post peak oil world on the American continent any way.

I wouldn't put coffee totally out of reach since the technology of sailing ships will return and it's a coastal haul, no deep ocean crossings.

Wadulisi Tsalagi

John Michael Greer said...

Someone, I don't think it's accurate to say that overproduction, or anything else, is the one, basic, unsolved problem of capitalism. Like every other human creation, it has plenty of flaws, some fundamental, some less so; overproduction is up there, but so, for example, is the inherent drive of capitalism toward monopoly -- as Adam Smith said, people in the same trade never get together, even at social events, without coming up with a scheme to rig prices and cheat the public -- or its equally inherent drive to privatize benefits and dump the costs on the public.

Bruce, it's a commonplace of history that political movements and parties turn into their opposites if they survive long enough. Evangelical Protestant Christianity was a radical left wing movement in the 19th century, for example -- William Jennings Bryan, the great populist politician, was also a devout fundamentalist -- and environmental conservation was a right-wing concern until well into the 20th century.

Rainbow, you're welcome!

Cathy, Seattle also just barely missed being named Duwumps, which I think would have been a better name for it (full disclosure: Seattle is my home town). It didn't quite try to call itself "New York;" the actual name was "New York Alki," that last word being Chinook jargon (the local native trade language) for "in the future;" you indicated how long in the future by stretching out the A, and it was a running joke for many years to call it "New York Aaaaaaaaaaaaaaaalki."

Arthur, any general survey of panics and crashes -- Kindleberger's Manias, Panics and Crashes, Galbraith's A Short History of Financial Euphoria, or Reinhart and Rogoff's recent and very solid It's Different This Time -- ought to give you a good grounding.

Peck's, now that is an online handle most people won't get. As for the moai, well, yes.

Glenn, it was a bull, Vox in Rama,, and it was against heretics, but had some references to cats in it as well.

Phil, that's too funny. Wasn't it James Thurber who used to tell stories about an aunt who insisted that leaving a light bulb out of the socket would let the electricity leak out?

Jess, we'll get to both those points. I'm sorry to say that a win by the anti-imperialists would not necessarily have had a better outcome, since the US was far from the only country trying to expand into the vacuum as the British empire faltered. By the time push came to shove in 1940 or thereabouts, the choices basically amounted to Germany, Russia, and the US; the last (and still very substantial) opposition to US empire collapsed then, because it was all too clear what would happen if one of the other two contenders won out.

Escape, yes, Say's "Law" is one of those fallacies that keeps being rehashed by economics professors even though the real world doesn't work that way. As for Technocracy, it always made my skin crawl -- trying to run a human society by the rules of engineering is a good recipe for inhuman outcomes -- but in the context of the time, it's understandable that it would have been popular. Thanks for the links!

Prack, true enough. I'd also like people who insist that government regulation is always a bad idea to read a chapter of Upton Sinclair's The Jungle right before dinner every night.

Karim, that's an excellent question. In a deindustrial society, where concentrations of wealth, energy, and resources are on a much smaller scale than they are today, useful items of the sort you've described will have to be made by craftspeople rather than by factories; they will be a great deal more expensive and less common, but they will very likely exist -- lens grinding used to be done by hand; the philosopher Baruch Spinoza paid the rent by grinding lenses, for example.

John Michael Greer said...

William, well, we'll see how much of the pounding is propaganda and how much is for real. This isn't the first time the Left has been convinced that war with Iran was about to happen.

Brad, exactly. This is why it's absolutely crucial for individuals to get to work learning how to grow food in intensive gardens on a backyard and vacant-lot scale, small enough that they slip under the agribusiness radar. In the twilight years of the Soviet Union, small gardens like those played a huge role in keeping people fed, and they can do the same thing in the twilight years of the United States.

Dick, that exponential curve is a function of the replacement of human labor with energy from fossil fuels; a curve that showed production per barrel of oil equivalent would be a very different matter! Since fossil fuels are depleting rapidly, the curve of production per worker is also at or near a peak, and can be expected to fall off at something like the same rate as energy per capita in the years ahead.

Thus it's a self-correcting problem; as it becomes impossible to maintain fossil fuel production at the levels of the recent past, human beings with hand tools will become more economical as means of production than automated factories, as in fact they already are in many Third World countries. This post of mine discusses the issue in some detail, if that's of interest.

Prack, excellent! A few years back, there used to be a bunch of neoprimitivists insisting that once industrial society fell, we'd all have to go back to the stone age because all the concentrated metal ores had been dug out of the mines. Now of course they'd clearly never heard of bog iron, which is concentrated by chemosynthetic bacteria, but the point you've made is even more important: all that metal is now sitting on the surface of the Earth, and much of it will be concentrated in big urban ruins, where it can be hacked apart with hand tools, cut into workable lengths, and hauled to local blacksmiths and metalworkers. It'll be millennia before they run short, and by then there ought to be plenty of bog iron.

Rachel, thank you. See you there!

DeAnander, that's classic industrial economics at work.

Jennifer, we'll be getting to that fairly soon. Britain would have lost the First World War, too, without massive American help.

Wall, China's had some very substantial periods of empire building; it's simply that their focus, back in the day, was expansion into central Asia rather than overseas. As I'll be showing down the road a bit, they've very clearly learned some things since then.

Adrian, you're quite right -- the connection between overproduction and growth is that growth has been used in the past as a way to counter overproduction, by increasing the number of consumers with ready cash. That only works if you've got the energy resources to back it up. We did, back in the day; we don't now.

Doctor W., on the one hand, it's not always a matter of the final sales price; on the other, the major target for the wealth pump isn't the imperial nation, but other nations dominated by the imperial nation. Check out the retail price of manufactured goods from overseas in the Third World, as compared to the local average income on the one hand, and as compared to the cost of exports of raw materials on the other!

David, to the best of my knowledge it's massively under-researched. I'll see what I can come up with.

KL Cooke said...

"Peck's, now that is an online handle most people won't get."

I get that one, only because my mother remembered how much her grandfather enjoyed it, and found a reprint back in the 60's.

You may recall however, that beneath the rough joking there was a strong moralistic leitmotif, with particular regard to the upcoming Temperance movement.

John Michael Greer said...

By the way, I owe a thank you to everyone who's chipped into the tip jar! It's much appreciated.

Cherokee Organics said...

Hi John,

Very amusing! Your analysis of the situation is probably correct, we'll see. I'll let you know how it goes, although I suspect that once it begins a downward slide it will accelerate rapidly. I'm watching it closely to see what happens.

I could be wrong though as there are two new sources of revenue for the government about to hit the scene here. A carbon tax and a mining super profit tax. There's been quite a lot of rhetoric about both in recent times.

Debt is creeping up here though. Last I checked it was 22% of GDP and climbing.

Labour productivity is getting a bit of air time too from captains of industry. Whatever labour productivity means though. You could possibly substitute profits if you were truly cynical?

Regards

Chris

shtove said...

Interesting post on nakedcapitalism that makes similar points to JMG's - the author suggests a parallel between the slave based economy of the south and the increasing extraction of rent from employees:

http://www.nakedcapitalism.com/2012/03/mark-ames-the-one-percents-plan-for-the-rest-of-us-%E2%80%93-livestock-to-be-milked-for-rent.html

EchosRevenge said...

Excellent post! I've been thoroughly enjoying this series on American History - I had thought myself fairly well-informed on the subject, being the beneficiary of a series of far-from-useless history and civics instructors. You have proved once again that there is always more to learn.

Speaking of the Age of Limits Conference, would anyone from northern New England wish to carpool (or, coordinating trains...I'm new to a non-exclusively-automobile infrastructure)? I'll be coming from Maine, and if I'm going to burn the gas to drive, I'd rather burn it to get several people there than just myself. I've emailed the conference organizers directly as well, but no response...so I thought I'd throw a ride offer out to the wonderful community here too. See you there!

EchosRevenge said...
This comment has been removed by the author.
Jim Brewster said...

Sorry to go off on the WWII tangent, but...

As long as FDR was commander-in-chief, it's hard to imagine the US joining forces with Hitler. We had also built a pretty cozy alliance with Britain and France by that time, and we were already pumping a lot of resources into keeping them in the fight.

I guess if we had sided with Hitler, the first thing we would have done is occupy Canada.

But as Americans we find it easy to focus on the European and Pacific theaters and forget the role played by Hitler's fateful decision to invade the USSR in June 1941. Napoleon could have told him how that would turn out...

Richard Larson said...

Well, you know it is very hard to interject an opposing idea when you erect the whoppee cushion analogy.

I couldn't even read the rest of the post!

I believe a study on "fractional reserve banking" is in order as well as how the US Federal Government allowed the banking system to switch between Gold and silver - depending on which noble metal came out of the ground faster - expanding the currency and financing industry.

Same effect as printing non-redeemable currency. Same finance through credit and currency expansion leading to economic boom, concentrating wealth pushing the rest of us as bust, then as now.

The fact you highlight Austrian Economics and the free market nirvana notwithstanding.

Oh, the history makes perfect sense. Good to know thanks.

Now back to the rest of the post!

Richard Larson said...

Oh yes. Overproduction with a twist: using less human labor. This could be a major reason for the continuing Long Depression as mechanized equipment revolutionized agriculture.

Just think, whereas, and other than the greenback, the credit seeds of the Long Depression was limited by Gold and silver 'production', mixing in a little fractional reserve independent banking hocus pocus. To this time around there is no limit. This current currency doesn't even need ink and paper!

This Federal Reserve Note allowed the credit that tore apart our Earth, and its end may leave it all life-less. Or less life as it is.

Oh, can we please add two more longs in anticipating the next depression?

Of all things. The great beast dies of dysentery!

I wonder what he was eating...

It is hard for one person to know all that happened, but it appears all we have is a television-less lone mage working it out...

You know there is no definition for mage on Wikipedia? Or am I spelling this wrong?

prack45 said...

"The Jungle". Now that's a book that resonates with me being of primarily Lithuanian descent. I spent quite a lot of my time growing up with my grandparents during the 70's and early 80's who were Lithuanian and shared many of interesting life stories. They lived in a row house in a small Massachusetts city with most all their yard converted to gardens. We were all involved with ethnic communities that provided a substantial amount of resilience (green wizardry) that allowed us to even flourish at times during the 70's recessions.

It was really a shame to see this type of community resilience start to dissolve throughout the 80's, hopefully one day it will make a revival preferably before the "chips" get to far down.

shargash said...

Gregory was also the pope who began the papal inquisition to deal with heresy, particularly the Cathars of Occitania (now southern France). The Cathars had been crushed militarily by a crusade declared by Innocent III a couple decades earlier, but the heresy had stubbornly resisted attempts to root it out.

inthesecretwoods said...

Your posts are always food for thought, but this one really resonated. It makes sense not just at the level of nations, but also at the personal level.

Home economics was, in the past, about home production. Consider how personal "tariffs" and "trade barriers" could profit the homeowners who grew their own food, made their own clothing, built their own homes, invested in their families and communities, etc., and "protected their industry" by refusing to sell their resources (labour) in exchange for overpriced goods from corporations. Homeowners who focus on production instead of consumption, who use their own resources (labour, land, tools, creative energy, knowledge) to produce things for themselves or to sell to others, or barter with others at a fair exchange, have a better chance of acquiring some wealth of their own, instead of seeing wealth acquired by the few elites.

In fact, home production is a direct threat to corporations who would much prefer that you use their overpriced services, goods, etc., exchanging them for your labour (resource) much like the resource-providing nations do for the industrialized nations. So growing your own herbs for medicine, taking care of your elderly or your children, sewing your own clothes or buying at thrift stores, growing your own food, making furniture, building your own house, etc., is much like nations erecting trade barriers.

And taking it one step further, if larger projects are made possible by the accumulation of wealth, why can't we pool the wealth we own collectively to create projects that would benefit us collectively, instead of accumulating wealth for a few private individuals?

The only difficulty is that a lot of land is so overpriced, that the struggle to pay the mortgage pretty much forces one to get a job. And then, of course, you are on the treadmill.

LewisLucanBooks said...

Thank you for explaining the Panic of 1873 and the Panic of 1893. So often when I read histories or even novels about the PNW they play a large roll, but there's little explanation. Money dries up, people get poor and times get tough. Annie Dilard's "The Living" comes to mind. It's a novel about the settling of the Bellingham, Washington area.

@ Matt & Jess and Red Neck Girl - I also, worried about coffee. So, I got myself off the Java and have switched to tea. Buying it now, but intend to grow my own.

I'm also looking into growing ginger and turmeric. There are several vids on YouTube explaining how to pull it off in the PNW. I figure even if the supply of these things don't dry up or get really expensive, I've at least saved myself some money. And, they'll be left behind for who ever follows after me.

If the supply dries up or gets too expensive in my lifetime, I'll have a few little luxuries to cheer me up and maybe some surplus to trade.

John Michael Greer said...

KL, true enough.

Cherokee, "labor productivity" can be usefully defined as how little you can pay in wages to get a given quantity of profit. The fixation on that number isn't a useful thing these days, but try telling that to economists.

Shtove, thanks for the link!

Revenge, I hope to see you there!

Jim, we'll be going over all this in some detail in a bit, so it's not entirely off topic.

Richard, of course fractional reserve banking and precious metal manipulation deserves attention, but the US government wasn't doing either of those between 1865 and 1912 -- and the banks that were engaged in fractional reserve banking did it because they weren't being regulated by the government. I'd be more impressed with the Austrian model if it did a better job of explaining why, under a gold standard, the US economy had more depressions and more stock market crashes than it's had since then.

You're spelling it right, btw; just goes to show you that Wikipedia is far from omniscient!

Prack, people abandoned community resilience because, during an age of lavish lifestyles, its costs were higher than its perceived benefits. As the age of abundance sunsets out, I expect to see a lot more community solidarity.

Shargash, true enough. In fact, it was that same cat-bashing bull Vox in Rama that established the inquisition.

Woods, nicely put. The need to pay for land -- well, that's one of the reasons I've encouraged people to look at trying out one-income families again, so that at least one person can be freed up to work outside the money economy.

Lewis, excellent! Spices are always popular, and I know from experience that the native ginger of the Pacific Northwest is very nicely hot, if the more common culinary variety proves difficult to grow.

Jennifer D Riley said...

Just articulating that whatever Imperial Britain was trending toward came to an abrupt halt during World War II when Imperial Britain suddenly needed help. None of the "empire" of "Imperial" was able to help.

Puts India into an interesting light. For all its size, India was little or no help to Imperial Britain during World War II. Feel free to disagree.

Slavery in the US: for the slaves in 1860-70 seems we have new debt slaves in the 2010s that are not African-Americans. For the past 10 years, jobs go to India and China. India is right in the same realm as Iraq, Pakistan, Iran, and seemingly has far less trouble than the United States has just now, or perhaps the US doesn't have any trouble but the Military Industrial Complex wants its contracts perpetually fulfilled and its lobbyists quietly rewarded. Poetic justice, karma, and cycle seems to be the front face of human nature, money accumulation, and envy.

Steve said...

I've been thoroughly enjoying this series, and I'm still very excited to see where you take it.

A couple of observations came up for me. First, your comment about economic theology struck a chord with me, as one of the first things I noticed about the neo-Austrian fans is that they seem to follow the myth of apocalypse religiously. They hark back to the golden age before the Fall of the Fed (without mentioning many specifics), then talk about how Keynes is the devil and Bernanke is the latest iteration of the Antichrist, and they one and all predict an impending day of reckoning when true believers will be saved (by their stockpiles of gold and silver) and the rest of humanity will suffer a dire fate. A familiar storyline dressed up in economic drag. It makes me wonder just what the whoopee cushion of the Long Depression would sound like in the church of Hayek.

Second, I'm reading Hobsbawm's Age of Extremes at the moment, and your themes of empire as wealth pump and industrial system as wealth concentrator translate nicely to the US post WWII that he describes. It seems that following the Great Depression American capitalists struck a bargain with organized labor that lasted for 25 years - namely that US workers would be the major market for US industrial production while the rest of the non-"communist" world faced the business end of the wealth pump to maintain capital concentration. When the crises of the 70s hit, the deal was off, and the American working class was arbitraged first, while purchasing power was propped up with easy credit. What we're seeing now is the next stage, when more and more of the US population can no longer participate as "consumers," and capitalists are using every tool available to keep the concentration of capital intact, which leads to overproduction. Meanwhile, China is quietly turning their own wealth pump on as DeAnander mentioned above, and all that most of us can do is watch it happen. Sure, it's much more complicated than that, but the perspective you're applying in these posts forms a very coherent narrative for making sense of the world. Thank you for that.

Also, for the coffee-drinkers, I've been thinking about this for a while as well, ever since I got a craving for chicory a few years back. Roasted barley and chicory make a great coffee substitute (or a coffee stretcher - that's my preference). My aunt from Montana actually markets a blend that tastes delicious and is cheaper than coffee, which makes sense because her husband farms a few hundred acres of barley.

p.s. Paragraph 14, sentence 2 rely = relies?

Repent said...

I know you don't own a television, but do you or your wife ever go to movies?

I saw the film 'The Hunger Games' last night and it was almost like a culmination of your posts on empire. A brief synopsis:

After a period of revolution, social and economic collapse and 'Ecotechic' society reemerges from the ashes of the old civilization. 12 zones each specialized in one area of economic production; ie, mining, farming, fishing, ect; feed a wealth pump to a decadent police state at the core of this new society. The decadent core retains modern technology, minus cars, and used that technology to suppress the 12 zones and keeps the wealth pump functioning. Shown 75 years into this 'new' society, from the future it presented a possible, if bleak, post oil world.

It was amazing and heartbreaking at the same time; and it was almost as if you had written the screenplay yourself. I couldn't help but see your concepts of a small 'e' empire in the film. Millions of near starving oppressed people supporting a corrupt central core; but caught in a technology trap where there was no escape.

I would recommend the film to you, and invite your comment!

Cherokee Organics said...

Hi John,

Your dry sense of humour is much appreciated.

I know this is off topic, but people keep coming back to the idea of land being expensive. At the same time though, people also complain (elsewhere) about isolation, whatever that means. I've heard the complaint often enough that there must be some basis to it, but it is beyond my understanding?

The reason I say this is because, Australian culture is such that people hide in their houses and don't seem to socialise at night. Haven't seen any vampires yet, so they don't really have that much to worry about!

I'm reading a lovely book by Annie Hawes called, "Extra Virgin (olive oil reference people) - amongst the olive groves of Liguria". It documents two English female twenty somethings integration into a northern Italian rural community in the 1980's. It is a very interesting read into and insight into a different culture and possibly also a glimpse into the future? The culture that exists in that time and place is very different from the current paradigm here for sure.

Isolation is a fictional state of mind and to my mind people are more isolated in the middle and outer suburbs here than anywhere else.

If people broaden their search for land, they may just surprise themselves. Most soils can be improved if treated gently, oh well.

As to spending time on the domestic economy, well, it does have pay back. It has been quite interesting here in the garden because after several years, things are starting to self-seed. I may never have to purchase potatoes and carrots again at the rate they are popping up all over the place. Plus the flowers are starting to go crazy too: cosmos; california poppies; marigolds; calendula's; and russell lupins. It is nice to have the space to let them go wild and it keeps reminding me of your comment that a resilient system is not necessarily an efficient system. I’m free ranging the 14 chooks now – under supervision and they seem to be having a good time too.

Hey Lewis,

Tea - both green and black - comes from Camellia sinensis. It would probably love your part of the world, except for the cold winters, as it has a sub tropical derivation. It can be grown in pots easily or a greenhouse there though. I killed one here because it was planted to close to the eucalypts and died over summer – the plants like a drink of water during summer. Black tea is fermented, whilst green tea is gently steamed. It is a plant that is well worth the hassle. I've given up on dreams of coffee here because the occasional winter tends to kill them, although they do well the remainder of the year.

Regards

Chris

Richard Larson said...

Yes, of course. Good point.

I really don't think the Gold model can work either - in this economic environment. But the bigs are busy accumulating it for some reason, and my bet is for money. Then to legally fraction it's value.

Should it happen, the largest beneficiary (but not the only one) would be the organization that holds over 60 tons, 30 percent of the above ground total.

The Catholic Church.

You know, if humans used credit to build a sustainable economic model, all would be good.

But I don't believe it could ever happen..

Brian Cady said...

Wow, When Mexico was French, empire-wise. I never knew. Also very much liked the insight that the US North divided after the Civil War into industrialists and agriculturalists over tariffs; this sheds insight into current affairs.
Thanks, JMG

BC

ganv said...

I would be interested in a more careful discussion of the way in which industrial capital is concentrated. It is easy to say that 'a market economy ... is always paired with ... the creation of unequal patterns of exchange that concentrate wealth in the hands of factory owners at the expense of ... pretty much everybody else.' It obviously happens. But assigning causal relationships is much less clear. You imply that there are some nefarious influences making this happen. But are there really serious competitors to the industrial system when the energy and resources are avaiable to make it run? It seems likely that demand for manufactured products means that the factories will be built somewhere. And the operative questions are where they are built, who owns them, and what profit margins they operate at. The first movers into lucrative industries achieve wealth and economic power. Sometimes that is concentrated in one nation and it looks like an empire. Seems this is kind of inevitable and is naturally unstable to what the Chinese are doing to US economic power right now..and what the US did to Britain a century ago.

John D. Wheeler said...

I must vehemently disagree with the notion that the wealth of capitalism cannot be distributed without destroying it. In the middle of the 20th century we actually found a solution to the overproduction crisis: retirement plans. They allow the average worker to enjoy the economic benefits of overproduction, while still allowing for concentrated control of capital.

These were sufficiently successful that we got to the point that a majority of market capitalization was owned by retirement plans. After they started being dismantled, overproduction reared its ugly head again.

LewisLucanBooks said...

@ Steve - Well, chicory and barley are all fine and good, but what about the CAFFEINE! :-) . Yup. Just a Java Junkie, here.

@ Cherokee Organics - Yeah, I don't know what all the moaning about isolation is all about, either. Well, I do, but it just doesn't effect me much. I've just moved out to the boonies, and I can go for days without seeing or speaking to another human being. Probably hangover from working with the public for so many years.

But, I understand the need for community, of some kind, especially given what may be coming down the road. I DO have maybe 5 very close friends. And, I'm reaching out to my neighbors. One of them is 99 years old. She's going to give me some strawberry starts. I gave her a Christmas (Thanksgiving) Cactus and I've got some blue morning glory seeds I'm going to give her, that I think she'll like. (I know they may spread like crazy, but her Master Gardener son says that isn't a problem here.

On tea. I'm v-e-r-y lucky that not far from me is an outfit called Raintree Nursery. About the same elevation, too. They have tea bushes. So, acclimation is not going to be a problem. I am also reading "Tea" by Gascoyne, et all. I'll plan ahead for heavy snow or hard frosts. Must be something I can do to protect the plants.

LewisLucanBooks said...

I am reading "An Empire Wilderness" by Robert D. Kaplan. It was mentioned by Morris Berman in one of his books. It's subtitled "Travels Into America's Future."

It's a little dated (1998) but the trends he mentions, continue. It's a journalist's travels around the western United States. I think I like it, because so often, when I run across people who travel, I always ask "What's it like out there?" And, I get these blank looks. He observes and reports back.

I've read the section on the SW and am looking forward to his exploration of the Pacific Northwest. He talks about so many things that have been covered in these blogs. Settlement patterns related to East Coast models, etc.

It's interesting that he seems to run across a lot of thoughtful people who are aware that the central government is weakening, and that they need to prepare for a future where "big" government doesn't play such a large roll. A couple of instances is that farm subsidies will end and so will the Bureau of Indian Affairs.

I think the book is worth a look. I got my copy from my local library.

Cherokee Organics said...

Hi Jennifer,

None is a strong word. The forces of Australia, New Zealand, Canada, South Africa etc were up to their eyeballs helping Britian in WWII. Even smaller countries like Nepal punched well above their weight - look up the history of the Ghurka's sometime.

Regards

Chris

Dwig said...

I'm definitely enjoying this trip through US history. It's fleshing out some things that I'd been thinking about, and filling in many gaps.

JMG: "the rise of an industrial economy is itself the result of a complex set of feedback loops involving fossil fuels and capital concentration, which sooner or later runs into diminishing returns and begins to unravel, returning to a state closer to equilibrium."

Howard Odum's "pulsing" paradigm, of phases of capital buildup followed by destruction, might be a good way to model this (see for example Pulsing Paradigm and Cultural Evolution of China). Another is C.S. Holling's Adaptive Cycle. (And of course, whats-his-name's catabolic collapse model 8^).

So, here's a question to explore: suppose the population of a nation, or somewhat autonomous region, were familiar with models like these, and could tell at any time where they were in the process? Might this knowledge allow them to manage the phases rather more gracefully than we have been and are doing it? How might that knowledge be applied?

Andrew H said...

Jennifer,

I think you might want to do some research. Try Wikipedia

Apart from the forces nominated by Chris, India was a major contributor to the allied forces during the second world war. There was certainly significant opposition to their involvement from the Nationalist movement including Ghandi, but even so by the end of the war, India had the largest volunteer army in history, having some 2.5 million men. They fought against the Germans in North Africa and Europe, although the largest force was against the Japanese in Asia.

DeAnander said...

The only difficulty is that a lot of land is so overpriced, that the struggle to pay the mortgage pretty much forces one to get a job. And then, of course, you are on the treadmill.

the work of Henry George immediately comes to mind! H G fansite :-) I read Progress and Poverty and found it somewhat tedious, but his analysis of real estate bubbles rang a number of bells.

the Enclosure and subsequent pricing of land is for me the foundation of the industrial-capitalism game; not only does it aggregate wealth in the hands of the now-owners, but it deprives the masses of any hope of making a subsistence livelihood (another way of spelling "green wizardry"), thus reducing us to wage-dependent serfs, i.e. a cheap labour pool.

someone -- who was it? -- said that civilisation is perpetually at war with subsistence. "great civilisations" require corvee labour for monumental projects and hacienda agriculture, and people who can easily feed themselves are not easily dragooned into work gangs for the profit or glory of others. I am still trying to get around to Maria Mies' highly-regarded The Subsistence Perspective but my only edition is an old paperback with -- perhaps for cost-containment reasons? -- very very small print; and middle age is slowly eroding my ability to get cosy with 9 pt type unless I wear reading glasses (which I haven't yet surrendered to).

Blunt Object said...

An well-timed piece on America as a (now) internally-extractive empire:

http://www.counterpunch.org/2012/03/27/how-the-new-american-empire-really-works/

Matt and Jess said...

There's no substitute for coffee--suppose I'll have to move to a coastal area then. I recently visited a museum in Wyoming that featured some stuff on the white settlers in that area in the 1800s-early 1900s and noticed that they did in fact have coffee available though I'm sure the quality was very lacking. But that does bring up an interesting question of what future trade routes will look like because on top of everything else there's also global warming to think about. I would imagine that the great lakes region would be valuable what with the St Lawrence river. Then there's the rail that JMG is counting on in his area. What I really need is a detailed map on trade routes of a century ago combined with a future map of sea level rise.

Also to the person who mentioned the hunger games: it's a very dystopian look at the future and I hope that things won't get to be anything like that. I loved the movie though, saw the midnight showing! I wonder if dystopian visions come from the same place as the emphasis on apocalypse. At least in a dystopia there's something to fight against.

John Michael Greer said...

Jennifer, it's not so much that I disagree, as that the facts do. If Britain hadn't been able to pull in a huge amount of help from its empire in the Second World War, it would have collapsed in 1940.

Steve, you might consider giving roasted dandelion root a try, also -- very tasty stuff.

Repent, thank you, but I'll pass. I'm not much of a fan of mass media in general, visual or otherwise -- I don't read the latest heavily marketed novels, either.

Cherokee, remember that most Americans have no idea how to get to know their neighbors. Their social outlets consist almost entirely of businesses set up to charge them money for giving them a setting to relate to other people.

Richard, agreed -- there's no way to build a really viable financial system using credit. The problem is that there's no way to build a really viable financial system without it, either. That leads to an interesting conclusion...

Brian, that's why studying the fine details of history is so important! The version of history you get off the media is basically nonsense.

Ganv, it's not a matter of "nefarious elements" -- where on earth did you get that notion? If you don't have unbalanced systems of exchange, you can't maintain an industrial economy, so those who want to maintain industrial economies use their wealth and influence to get unbalanced systems of exchange in place -- it's that or go under. As for the replacement of Britain by the US and the US by China, well, yes -- I talked about that in an earlier post, and will be talking about it further later on.

John, er, that's an astonishing non sequitur. First, the people who were primarily on the losing end of wealth concentration in the middle of the 20th century were in the Third World -- were you under the impression that they were getting pensions from the US? Second, the fact that a trickle of money was handed out to privileged sections of the middle class to keep them happy and passive doesn't amount to a redistribution of wealth in any meaningful sense. You might want to try again, this time a little harder.

Lewis, Kaplan's a remarkable read, in several senses -- not all of them complimentary. I'll be discussing some of his work down the road a bit.

Dwig, depends on how much control the population has over the buildup of wealth and influence in the hands of individuals -- always the issue! Thanks for the links, btw.

DeAnander, I've had to make my peace with reading glasses; when it got to the point that I was giving myself a headache trying to read type that was too small, I accepted the inevitable.

Object, thanks for the link!

Jennifer D Riley said...

@Cherokee: thanks. This forum reminds me of a postgraduate forum. India et al., ok, but it's to my point that in WWII England needed the US even given India et al.

Approaches: total the land mass of Imperial Britain plus the US in WWII. Then there's the German land mass.

Next, measure the industrial capacity of German et al. versus Imperial Britain and the US. Guess the industrial capacity and human power was trumps and led to Germany's defeat.

Jim Brewster said...

Matt & Jess, for sea level maps, this is interesting:

http://flood.firetree.net/

Much of the St. Lawrence will be an estuary, but the Great Lakes themselves, with the possible exception of L. Ontario, are well above any plausible sea level.

I think canals will make a big comeback. They can be built and maintained at a low-tech, albeit labor-intensive, level. Pretty much the entire state of Pennsylvania was connected by canals for a brief period before the coal-fired locomotive proved more economically feasible, and that is a fairly mountainous state.

http://en.wikipedia.org/wiki/Pennsylvania_Canal

Some of the never-completed links between the PA and NY canal systems might also be revived. They were always limited more by political than by technical considerations.

Jennifer, a lot of the wealth of India was pumped into London by that time. Also notice that Germany was desperately grabbing up land and putting its wealth pumps into overdrive. The British empire was much more fragmented geographically, making logistics trickier.

You would also have to take into account oil well development in different territories at the time, since oil was so crucial to mechanized warfare. In Europe the main source was the USSR, and the refineries were in Poland. I wonder if that is why the German/Soviet occupation of Poland was the final straw for Great Britain and France?

Three factors defeated Germany, all related partly to oil:

1. Germany invaded the USSR, turning a neutral country into an enemy, opening a massive new battle front, and cutting off a major fuel supply.

2. Germany failed to gain control of Soviet oil fields, one of its primary objectives.

3. The USA entered the war with its own petro-surplus.

Tyler August said...

@Jennifer, RE: WWII

Don't ignore the Soviet contribution. Their industrial capacity alone matched the Third Reich, and their population was greater. By landmass, obviously, the USSR dwarfed the Third Reich. By the end of the war, the USSR was able to field as many men as the rest of the Allies had in Europe. Most German casualties were on the Eastern Front. Most of the casualties caused by the Germans were on the Soviet side, too.
A Soviet-German war, minus American intervention, would have been horrifically costly and bled both sides white-- too evenly matched-- but I figure the Soviets would have won out in the end. Unless Japan jumped in and opened a second front in Siberia... but that's all alternate history.
My point is that almost every English-language account of the war seriously plays down the Soviet role in the European theater--and completely ignores it in the Pacific--just as American accounts play down the role of the Commonwealth in both World Wars.

Okay, off the Great Patriotic War soapbox.

ando said...

JMG,

an interesting take on the "New
American Empire"

http://www.counterpunch.org/2012/03/27/how-the-new-american-empire-really-works/

namaste

ando

Galen Gallimore said...

Just a minor note - it is the book of Revelation, not RevelationS - there is no 's' on the end. Bible scholars have a tendancy to look down on folks who mispronounce this one, since it implies you've probably not actually read the book but simply are throwing around the title to imply the cultural misunderstandings associated with it. Plus its a real pet peeve of mine. ;)

Anyway, thanks for a great blog. I continue to read from time to time for your insight into our culture.

ganv said...

The idea of 'unbalanced systems of exchange' is the thing that I am probing after. What defines unbalanced? The easiest way to define this is that there are some means of enforcing inequality that should not exist...slavery, military intervention, etc. It was these that I was lumping under 'nefarious'. Many exchanges are between people with different levels of economic power but are still viewed as a favorable exchange by both parties. It is much harder to call these exchanges 'unequal'. And I was identifying that it seems likely that even if one removes all nefarious influences, you still would end up with an industrial system and concentration of wealth as long as there are physical resources to support it. In short, I am not sure that any 'balanced' system of exchange exists, and if it were to exist I am quite sure it would be unstable. Without central control of an economy there is going to be concentration of wealth and production of an industrial system.

Einhverfr said...

I think that this is all virtually undeniably correct regarding the inherent instability of industrial, liberal capitalism. The real question becomes "what do we replace it with?" As a heathen, I have found myself increasingly fond of Distributist approaches because they seek to undermine the distinctions that pump wealth to the top. I also think that there is some delicious irony in the fact that what may perhaps be the best approach yet to undoing the economic harm from the Conversion came out of English Catholicism....


As for retirement plans which Mr Wheeler thinks avoids this problem, I think there is a half-truth here but only a half-truth. In traditional times, one's retirement plan was one's children. Multi-generational households provided vital continuity for children, and support for raising children, as well as care for the elderly. We have lost this due to the retirement plans and this is a real shame.

On the other hand what retirement plans have done is distribute ownership of companies more widely. This is a good thing. But perhaps it would be better if most people were owners of businesses, instead of employees.