What powers global growth?

The picture is Guercino's Et in Arcadia Ego, which is often sidelined in the popular bourgeois mind by Poussin's picture of sheperds which Dan Brown, Henry Lincoln, and others have turned into a travesty of art-as-something-useful in recent years. Guercino's painting is about the contrast of opposites, and has been seen as a play between harsh reality and dreamy innocence.

I live in a decaying, if not undead, part of the west, which is nevertheless used to high standards of living. In it, students of macroeconomic policy are told that their heritage of economic domination has emerged in one of three ways, though economists are divided on and, frankly, disinterested as to, which one.

A line emerging from a theorist of business and an imperialist holds that the accumulation of capital, and its association with population, technology, and productivity, is the key to growth. This ideological strain can be traced over the years in the economics of the solow and rostow models, and was augmented in the nineteen seventies and eighties by thought-experiments in which individuals were rational, markets were information systems, and risk could be derived, alienated, and sold.

A second group, associated with the likes of Keynes, Kalecki, Kaldor and Minsky, believed that aggregate demand powered growth, which was accelerated by investment or by powers derived from the distribution of income and the ownership of assets. They held that growth was a given if governmental institutions stabilised the complex mechanisms of demand and investment, though they disagreed on how individual assets could overcome the complacency of success and the ineluctable forces of depreciation without government. Kalecki's very much mid-twentieth century premonition of a corporate economy driven in part by war spending, the control of capital, and periodic crashes, has made him very popular in an underground way lately.

A third line, deriving from Schumpeter, were treated mostly as astrologers. They thought that entrepreneurs rode the surf of convergent cycles that were stretched over different times, which traced the arc of a technology, the life cycles of products derived from it, and the inventories of firms eager to profit. Occasionally, the surf turned and they were destroyed, but society was left with their knowledge and with what they had learned. Somehow, Schumpeter--an unhappy Austrian theorist of capitalism's future suicide--has become a name to drop when devotees of a particular cult of Hayek want a reference to useful apocalypse to strengthen their exegesis.

Economists tend to pick and to choose which of the theories of growth they believe corresponds closely to the world depending on the type of world that they would like to see. I find myself wondering, though, what this all comes down to. Is it possible, in any synthetic way, to see where global growth comes from, and where it is going, through such lenses?

Some 136 new states have emerged since the San Francisco conference of the mid-twentieth century. Earth has seen a sort of Napoleon in reverse; a reconstitution of bizarre and small entities rather than their confederation. Multinational companies and banks, on the other hand, have become stronger than the corporations of the medieval church.

Even after the depredations of the last year, the top ten global companies seem to have values that are higher than the combined GDPs of the bottom one hundred countries. Terms such as 'quadrillion' have been invented for global bank products, and technology has created a level playing field for the rich and an undulating, swamp-ridden landscape for others.

I can't gainsay that there has been global growth. For the first time that I can recall, and indeed for the first time in the modern era, Africa is not being crushed under debt or starved in a western recession. It is being denuded of resources; but resource loss is being accompanied by the accumulation of capital, and anyway, over dependence on one or two commodities controlled by small elites has been one of the curses of Africa. I notice that the end of oil is, bizarrely, diverting monies to African and South American countries as the search for fuel goes deeper, and as replacement fuels are experimented with.

The huge and stable growth of India, and the rise of the south and east Asian nations are not just benefits to Australia, or a risorgimento of a zone burned by imperialism. They benefit us all. There are days when I look at the euro-zone, which I've thought ought to collapse in the past, and seen strong, savings-based economies with governments like those of Germany and France not run by a skittish, self-interested political class, and admire them. I as a human being grow because other humans are happy; I as a human being am weakened because others are lost.

So there is more than enough scope for predicting that growth is developing from accumulating capital and a new distribution of wealth and assets and monetary stability in the east. There may be deflation, Pakistan and China may implode, Japan might slip into a long poverty--but ultimately I think that they are going to be alright because they have families and work and children who can think.

What strikes me is that the west, and particularly the UK, is negatively proving the ideas of economic thinkers. Here is a society that did not save; that made life easy for credit oligopolies and their feudal view of repayment; that hollowed out its manufacturing; that is massively accelerating its government debt and crowding out capital; that ignored monetary economics and that refused chances to hold back and to stabilise.

Here is a society whose bankers now purport to find themselves shocked that secretive colleagues were more driven by money's rant and bonuses than by the rational scaling-back of risk in the derivatives markets a few years ago. Here are people who believe their rules about growth, and harder work, and reasonable behaviour, are for the little people. Here are corporate socialists who expect subsidies and bail-outs whilst they plot ways of paying their cleaners less.

Many things come back to an individual's prejudices and experiences. I recall touring the middle temple's archives, for instance, and seeing Christopher Wren's handwritten account of the way he stiffed his workers so much that the Inn awarded him a silver service, once he had ensured the construction of St Paul's. Why not, I wondered, give those long dead working men a little more of the bread and ale that they had earned? How many sleepless nights in the long-ago had been caused by that remarkable demonstration of Wren's capacity to appreciate the marginal control of costs, and the low marginal cost of an award to him after a large average reward to capital?

I went off blaming Protestant corporatism. Had I been in Rome, I would of course have looked at St Peter's, as I have done, and felt it a monument to human achievement, and the only rebuke would be a tut from that psychotically alienated part of the self we all need to keep ourselves in check, the internalised 'Tu es Pulvis' who only shuts up when we find ourselves enough in love with another to listen to their proper restraint of us.

We get influenced by ourselves; no surprise there. But one of the west's signal achievements after the fall of Rome was to establish that we as intelligent men and women could understand objective facts that were outside of us. I look at Britain's economic and political situation now and I wonder if this is true. People are clearly not educated properly.

Those who could understand have been brainwashed by a career of privileged schools and institutions into not seeing the precarious and indeed awful state of their own country, and when they seek facts they cling to pseudoscience like global warming rather than to realities close to home but away from their own class. Those who cannot understand have been failed by a state education system, and a populist media, and a conniving, stupid, or disinterested political class from equipping themselves with the intelligence and courtesy that would allow them to see.

So I find myself asking about global growth, and the economy, and wondering at how confused the picture is. This economy is revaluing worth; it is removing some things from people on the basis of their shrinking disposable incomes and the hardening of credit, just as it is inflating others through a combination of cost-push and monetary pressures. People are deprived of the real assets, or faith, or understanding of their common condition, and education has failed them.

Those who think themselves agents of change are actually upholding a system that serves a sort of radical capitalism. The rest of the world is decoupling, though it may crash into deflation soon. And the grammar schools that could have taken and directed talent have been thrown away, so those in charge paid for everything from credit or assets from an early age, and in life spent their time locking others out.

Into this, we have slipped. It has been accompanied by the rise of a sort of undemocratic, regional and global political governance which is the only accompaniment possible to the medieval corporations who run the world. Those corporations spend some of their time reifying, pricing, and destroying culture; indeed, such destruction is fundamental to their present success. It diverts intellects, unleashes greed, and its loss isolates people from each other.

It is a thing of amazement to me that those who consider themselves progressive and expansive people should help, should celebrate this destruction as liberating to women and minorities. Liberating into what? debt slavery? Abortion?

The papacy recognised this familiar picture emerging decades ago. Neoconservatives, in their way, saw the possibility within it for the validating violence they crave; the more futile of the liberal left seem to have seen it as an opportunity to wring their hands a little harder, once their fingers had left their best-selling angst-ridden books and presentations on their macs.

And into this Arcadia, we go. Is there no one who can stop the collapse that is clearly coming to England? Should anyone even try?


Popular Posts