Capitalism’s harshest critics—Karl Marx among them—have always conceded that the surge in the output of food and manufacturers associated with the rise of European business firms, banks, and other entrepreneurial organizations was without precedent. Never before had so many individuals tried harder to increase production more rapidly in so great a diversity of enterprises. I believe the secret of this “great leap forward” in productive effort was the release of ambitious individuals from political, social, and moral restraints on self-serving attempts to accumulate wealth. European entrepreneurs were the first people in the history of the world who could go about their business without worrying if some “internal bureau of plunder” was about to cut them down to size. Equally important, they could accumulate wealth without having to worry about sharing it with friends and relatives who helped them get rich. Like “big men,” entrepreneurs accumulated wealth by making their followers—now called employees—work harder. But unlike Solomon Island mumis, entrepreneurs did not have to beg, cajole, and entice. Possessing capital, the entrepreneur could buy “help” and hire “hands” (plus backs, shoulders, feet, and brains). And the entrepreneur did not have to promise to give everything away at the next company picnic. Since his followers were not the “big man’s” relatives or fellow villagers, it was easy for him to disregard their requests for a larger share in the product. Moreover, the helping hands-backs-shoulders-feet-brains had little choice in the matter. Deprived of access to lands and machines, the “help” could not work at all unless they accepted the legitimacy of the entrepreneur’s claim to the “meat and the fat.” The “help” assisted the entrepreneur not so they could all have a feast, but simply to keep from starving. In sum, the “big man” entrepreneur was free at last to regard the accumulation of capital as an obligation higher than the redistribution of wealth or the welfare of his followers.
Capitalism, then, is a system that is committed to an unbounded increase in production in the name of an unbounded increase in profits. Production, however, cannot be increased in an unbounded way. Freed from the restraints of despots and paupers, capitalist entrepreneurs still have to confront the restraints of nature. The profitability of production cannot expand indefinitely. Any increase in the quantity of soil, water, minerals, or plants put into a particular production process per unit of time constitutes intensification. It has been the burden of this book to show that intensification inevitably leads to declining efficiencies. That declining efficiencies have adverse effects upon the average standard of living cannot be doubted.
What must be made clear is that environmental depletions also lead to declining profits. This relationship is not easily understood because, according to the laws of supply and demand, scarcities lead to higher prices. Higher prices, however, tend to lower consumption per capita (the market symptom of declining living standards). Profits can be sustained temporarily if the drop in per capita consumption is compensated for by an expansion in total sales based on population growth or the conquest of international markets. But sooner or later the curve of rising prices caused by environmental depletions will begin to rise faster than the curve of rising consumption and the rate of profit must begin to fall.
The classic entrepreneurial response to a fall in the rate of profit is exactly the same as under any mode of production that has been overintensified. To compensate for environmental depletions and declining efficiencies (which manifest themselves as falling rates of profit), the entrepreneur seeks to lower the costs of production by introducing labor-saving machines. Although these machines require more capital and hence usually have higher start-up costs, they result in lowering the unit cost of the product.
Thus a system that is committed to perpetual intensification can survive only if it is equally committed to perpetual technological change. Its ability to maintain living standards depends on the outcome of a race between technological advance and the relentless deterioration of the conditions of production. Under the present circumstances, technology is about to lose that race.
15
The Industrial Bubble
All rapidly intensifying systems of production, whether they be socialist, capitalist, hydraulic, neolithic, or paleolithic, face a common dilemma. The increment in energy invested per unit time in production will inevitably overburden the self-renewing, self-cleansing, self-generating capacities of the ecosystem. Regardless of which mode of production is involved, there is only one means of avoiding the catastrophic consequences of declining efficiencies: to shift to more efficient technologies. For the past 500 years Western scientific technology has been competing against the most rapidly and relentlessly intensifying system of production in the history of our species.
Thanks to science and engineering, the average standard of living in the industrial nations is higher than at any time in the past. This fact, more than any other, bolsters our faith that progress is inevitable—a faith, incidentally, shared as much by the Comintern as by the U.S. Chamber of Commerce. What I want to emphasize here is that the rise in living standards began only 150 years ago, while the race between rapid technological change and intensification has been going on for 500 years. During most of the post-feudal epoch, living standards hovered close to pauperdom and frequently fell to unprecedented depths despite the introduction of an unbroken series of ingenious labor-saving machines.
As Richard Wilkinson has shown, all the important technological changes introduced into England between 1500 and 1830 were made under duress and in direct response either to resource shortages or to population growth and relentless reproductive pressures. Behind the whole process was an increasingly acute scarcity of agricultural land which forced people into manufacturing and town-based means of making their livelihood. The periods of greatest technological innovation were those of greatest population increase, highest cost of living, and greatest amount of suffering among the poor.
During the sixteenth century, when population soared upward again for the first time since the Black Death, mining and manufacturing grew as fast as during the industrial revolution of the eighteenth century. Brass-making and metal trades flourished. The iron industry entered the phase of mass production as it passed from small forges to large blast furnaces. Glass-making, salt-boiling, brewing, and brick-making all underwent rapid expansion and intensification. The English ceased to export raw wool and turned to the manufacture of finished cloth. But England’s forests could not support the enormous increase in the consumption of wood and charcoal for construction and fuel. To relieve the great seven-teeth-century “timber famine,” coal mining was intensified. To get at the coal, miners dug deeper shafts, which put the mines below the water level. To get the water out, they dug drains into the hillsides. When the mines got too deep for such drains, they tried harnessing horses to lift pumps, then water wheels, and finally steam vacuum pumps.
Meanwhile, most mills continued to be run on water power. As land became scarcer, the price of wool rose. Soon it became cheaper to import cotton from India than to raise sheep in England. To run the cotton mills more water power was needed. But good water wheel sites soon became scarce. Then and then only did Watt and Boulton design the first steam engine intended to produce rotary motion for the spinning machines.
As manufacture expanded, the volume of trade increased. Pack animals could no longer bear the loads. Merchants increased their use of wagons and carts. But the wheels tore up the roads, dug pits in them, turned them into quagmires. So companies were formed to provide alternative forms of transport. They built networks of canals and experimented with horse-drawn railways. Large numbers of animals were needed to haul the canal boats and pull the wagons and carts, but the arable land available for growing hay kept shrinking. Soon the cost of feeding hay to horses exceeded the cost of feeding coal to locomotives. Then and only then—in 1830—did the age of the steam locomotive begin.
In Wilkinson’s words, all of this was “essentially an attempt to keep abreast of the growing difficulties
of production encountered by an expanding society.” At no point prior to 1830 did the technology that was being shaped by the cunning force of some of the greatest minds in England ever really get ahead of the system’s voracious appetite for natural resources. And 500 years after the Black Death the poverty and misery of English working classes remained essentially unchanged.
Conventional assessments of the standard of living in the eighteenth century paint a rosier picture by concentrating on the growth of an urban middle class. No doubt the middle-class grew steadily in absolute numbers from 1500 on, but it did not constitute a significant percentage of the European population before the third quarter of the nineteenth century. The distribution of wealth before then closely resembled the situation in many contemporary underdeveloped countries. One could easily have been deceived by the bustle and civic amenities of eighteenth-century London or Paris, just as one can easily be deceived today by the skyscrapers in Mexico City or Bombay. But beneath the glitter enjoyed by 10 percent of the population, there was only bare subsistence and misery for the remaining 90 percent.
The rise of the middle class in the United States tends to warp our perception of history, since it grew at a more rapid pace than in Europe. But the American colonial experience was an anomaly. The Americans took over a continent where no dense population had previously existed. Even a bronze age people would have been able to eke out a hundred years of rising living standards from a wilderness so richly endowed with soils, forests, and minerals. The only real test of the fruits of the first three centuries of rapid technological change took place in Europe, where the advance of science not only failed to relieve the plight of the peasants, but gave birth to novel forms of urban penury and degradation.
Certain facts seem incontrovertible. The larger machines became, the longer and harder the people who ran them had to work. By the 1800’s factory hands and miners were putting in twelve hours a day under conditions that no self-respecting Bushman, Trobriander, Cherokee, or Iroquois would have tolerated. At the day’s end, after contending with the continuous whine and chatter of wheels and shafts, dust, smoke, and foul odors, the operators of the new labor-saving devices retired to their dingy hovels full of lice and fleas. As before, only the wealthy could afford meat. Rickets, a new crippling disease of the bones caused by a lack of sunshine and dietary sources of vitamin D, became endemic in the cities and factory districts. The incidence of tuberculosis and other diseases typical of low-grade diets also increased.
Direct and indirect infanticide continued to be practiced on a scale that was probably as great as in medieval times. Most cases of what the law might have considered negligent or deliberate infanticide were passed off as accidents. While “overlaying” remained high on the list, unwanted children were also drugged to death with gin or opiates, or were deliberately starved. According to William Langer, “In the 18th century it was not an uncommon spectacle to see the corpses of infants lying in the streets or on the dunghills of London and other large cities.” Abandonment at the door of a church would have been preferred, but the chance of discovery was too great. Eventually Parliament decided to intervene and set up foundling hospitals with various systems for collecting unwanted infants without risk to the donor. On the Continent, infants were passed through revolving boxes set in the walls of foundling hospitals.
But government was not capable of sustaining the cost of rearing children to adulthood, and foundling hospitals quickly became de facto slaughterhouses whose prime function was to authenticate the state’s claim to a monopoly over the right to kill. Between 1756 and 1760 there were 15,000 admissions to London’s first foundling hospital; of those admitted, only 4,400 survived to adolescence. Additional thousands of foundlings continued to be destroyed by wet nurses employed by parish workhouses. In order to economize, parish officers assigned the infants to women who were nicknamed “killing nurses” or “she-butchers” because “no child ever escaped their care alive.” On the Continent admissions to foundling institutions increased steadily even during the early years of the nineteenth century. In France admissions rose from 40,000 a year in 1784 to 138,000 in 1822. By 1830 there were 270 revolving boxes in use throughout France, with 336,297 infants legally abandoned during the decade 1824–1833. “Mothers who left their babies in the box knew that they were consigning them to death almost as surely as if they dropped them in the river.” Between 80 and 90 percent of the children in these institutions died during their first year of life.
As late as the 1770’s Europe had what demographers call a “pre-modern” population: high birth and death rates (about forty-five and forty per thousand, respectively), a .5 percent per annum rate of increase, and a life expectancy at birth of about thirty years. Less than half the people born survived to fifteen years of age. In Sweden, where the eighteenth-century censuses are more reliable than elsewhere, 21 percent of the infants whose births were registered died within the first year.
After 1770 some parts of Europe entered what demographers call an “early transitional” phase. There was a notable decline in the death rate, while the birth rate remained approximately unchanged. This does not necessarily mean that the standard of living was improving. The study of “early transitional” populations in modern underdeveloped countries indicates that declines in death rates and consequent increments in population growth are compatible with unchanging or even deteriorating standards of health and welfare. Benjamin White, for example, has found in a recent study of impoverished central Javanese peasants that parents will rear additional children if this brings only a slight balance of benefits over costs. This relationship between numbers of children and income helps to explain why many underdeveloped countries seem so unresponsive to population control by voluntary family planning methods. Where the net benefits of rearing children exceed the costs, a family that somehow succeeds in rearing more children will be slightly better off than its neighbors, even if in the meantime the standard of living of the population as a whole may be declining.
The late eighteenth century in Europe was a time when there was a great demand for child labor. Within the household, children participated in a variety of “cottage industries,” helping to card wool, spin cotton, and manufacture clothing and other items under contract to entrepreneurs. As the locus of manufacture shifted to the factories, children often became the main source of labor since they could be paid less than adults and were more docile. It is safe to conclude, therefore, that the falling death rate during the early phases of the industrial revolution was due at least in part to the increased demand for child labor rather than wholly to a substantial overall improvement in diet, housing, or health. Children who previously would have been neglected, abandoned, or killed in infancy were now given the dubious privilege of living to the age at which they could begin to work in a factory for a few years before they succumbed to tuberculosis.
The failure of the first three centuries of post-feudal mechanization and scientific engineering was apparent to everyone. After all, widespread misery and suffering on the Continent provided the spark that ignited the French Revolution. In 1810 the workers in the factory districts of England were chanting “bread or blood.” More and more, the impoverished masses had to steal in order to eat. Annual convictions for larceny in England rose 540 percent between 1805 and 1833; 26,500 people were hanged between 1806 and 1833, mostly for thefts of minor sums of money. In 1798 the fear of revolution and the appalling plight of the working class in the midst of technical progress and economic growth had led the English parson Thomas Malthus to propound his famous doctrine that poverty and distress were inevitable. The means of subsistence had been increasing even faster. Malthus did not claim that population would never get into balance with food supply; rather, he warned that unless population was restricted through abstinence, it would be checked by wars, infanticide, famines, plagues, abortions, and undesirable forms of contraception. As far as the past was concerned, Malthus was absolutely correct. Where he went wro
ng was in failing to foresee how industrial production in combination with new modes of contraception would soon create a rapid and unprecedented rise in the standard of living.
Malthus and other nineteenth-century economists whose forebodings came to be known as the “dismal science” were challenged by Karl Marx and other reformists and radicals on the grounds that the poverty and misery into which the peasants and workers of Europe had sunk was a result of laws peculiar to the political economy of capitalism and not of human existence in general. According to Marx, capitalists made their profits from exploiting labor; under capitalism, wages would always be driven down to subsistence levels regardless of whether population was rising or falling. Marx insisted that the internal laws of capitalism would inevitably lead to the concentration of wealth in the hands of a few plutocrats and the pauperization of everybody else. Like Malthus, he failed to predict the rapid and unprecedented rise in standard of living which was shortly to take place.
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