Critique of TSW Part 25g The Social Microcosm

Blog 20150211

Bill doubts the correlation between economic growth and population growth and once again mixes scientific analysis with politics to ill effect.

I am ever so grateful to Bill Westmiller, whose comments are marked "BW: ". The quotes marked “TSW: “are from "The Scientific Worldview" and my comments are marked "[GB: ".

The Social Microcosm (Part 7 of 7)
 
TSW:  "It has long been obvious that economic expansion both stimulates and requires population growth."

BW: Actually, the inverse effect is true. The more economic development, the lower the risks of childhood death, the higher the availably of birth control, and the lower the reproduction rate. It's not the case that economic growth is directly related to population growth, nor vice-versa. Generally speaking, greater economic wealth results in a lower rate of fertility.

[GB: The statement is correct as confirmed by the numerous statistics included in Piketty’s book. You are referring to the latter half of the curve. During the first half, overpopulation in the countryside drives people to the cities in search of work. Cheap labor then stimulates industrial production, economic expansion, and a great increase in wealth that enables research in medicine that decreases childhood deaths and enables birth control. The result is, as you prematurely suggest, a decrease in fertility rates. Then, as population growth declines, there is a corresponding decrease in the demand for goods, causing a slowdown in economic growth. So get it in the proper order.] 

TSW:  "If there is a 1:1 relationship between increases in population and food production, then the relationship with industrial production is even more pronounced."

BW: It is true that food production is correlated with population (necessarily), but farming is not the primary economic activity of any economy. You accurately note that the increase in manufactured goods is three times the increase in population, but overlook a similar increase in services. The critical factor is not an increase in the value of economic activity (distorted by inflation) in any economic sector, but whether the average individual is leading a more happy, healthy, and productive life. For example, the median net wealth per household in the U.S. is $52,752, versus Canada at $89,014 ... but I haven't been able to find a historic chart of growth rates, nor a correlation of median wealth to total population.
http://middleclasspoliticaleconomist.blogspot.com/2012/07/us-trails-at-least-15-oecd-countries-in.html

[GB: Glad we agree. Instead of the production of food, shelter, and clothing, the economy is now based upon much more specious production mostly involving the substitution of one secondary need for another. That is why growth in the US economy, in particular, is now shifting to services, which in reality, don’t produce anything. They just amount to each of us helping each other out, with much of it spent doing what we could be doing ourselves.]

TSW:  "At that point we will have reached a steady state economy with a political system suited to the task."

BW: It may be the case that economic activity will approach some "steady state", but the *turnover* in dollars is not necessarily the same as wealth, which is the primary measure of each individual's opportunity to achieve material comfort and pursue happiness.

[GB: Right. That is why I am dubious about counting services as a measure of economic expansion. Food, shelter, clothing, on the other hand, could make certain neglected folks feel wealthy.]

TSW:  "The Industrial Revolution has produced a vast global migration from individualistic, rural existence to collectivistic, urban existence."

BW: I don't think it's correct to correlate individualism=rural and collectivism=urban. There is just as much individualism today as there was 200 years ago, maybe far more. The key factor is information technology, which allows every individual (via Facebook or other media) to express their individual uniqueness to the world. There was just as much collectivism in the Middle Ages as today, it was just more centered on religion than politics.

[GB: Remember the number one question that fits all political and economic systems: “Should we do it together or apart?” The welfare states of today tend to spend a large portion of their wealth on collective activities. That is because those states are highly urban, with immense infrastructures (and high taxes) necessary for their existence. Living in a log cabin or on a small farm great distances from other people most of the time does not prepare one for life in New York City; life in New York City does not prepare one for a solitary existence where there are few services and you must fix everything yourself. It seems that you have a different definition of the individualism-collectivism continuum. My discussion was not focused on uniqueness, but on economics—what people do to survive. Being a “character” with contrary habits and opinions might be interesting, but it is not always conducive to survival.]

TSW:  "The winners of this competition survive low prices by exploiting economies of scale in production and distribution."

BW: To some degree, this is true. However, there are also "diseconomies of scale", particularly in the centralization of economic sectors. It's not quite a Bell Curve, but size impedes adaptation to evolving consumer demands and innovations in technology. For example, in media, the major newspaper chains are dying, because the number of people who want news on printed paper has fallen steadily ... no matter how efficiently they put ink on paper. The largest, most concentrated markets tend to die out in competition. General Motors was the only option for decades and arguably increased their market share by "economies of scale", but eventually lost out (went bankrupt) because better products produced by smaller and more innovative producers attracted customers. Contrary to your assertion, the "evolutionary process" toward larger collective enterprises is not "irreversible".

[GB: The quote is correct, although I agree that adaptation in a changing environment is not a strong suit of megacorporations. Quickness normally is an inverse function of size and mass (football anyone?). The activity that leads to the formation of a large microcosm may lead to its downfall when the macrocosm changes. Your examples are excellent, although the dissolution of megacorporations is not really reversible. The factors that led to their assembly are very different from the factors that might lead to their dissolution. GM did not break up into the 100 different automakers it started with. BTW: Some of this discussion is appropriate in understanding the eventual demise of scientific paradigms such as the Big Bang Theory. Proponents are slow to realize the significance of fatal contradictions (like the elderly galaxies at the edge of the observed universe: http://thescientificworldview.blogspot.com/2009/09/elderly-galaxy-disproves-big-bang.html). Like GM and its combustion engine, one can always do a patch job to keep it working—for a while.]

TSW:  "By the time the Industrial Revolution is over, independent production will be obsolete for all but the most trivial items."

BW: This is a rather myopic view. The industrial revolution is not merely the transition from physical human labor to mechanized production. There are "revolutions" in the means of production every year. Nobody anticipated the "Green Revolution" that totally transformed food production. The computing industry was totally mechanized decades ago, with few people anticipating the proliferation of personal micro-computers. The same with printing, which is almost an ancient art, given personal laser and inkjet printers. The newest revolution is 3D printers, which are able to manufacture custom products, on demand, in the home. The trend has been consistently toward *more* independent production, rather than less.

[GB: The general evolution has not changed. Any product that substitutes for another at a cheaper cost normally will have increasing sales, stimulating increased production and imitation. As the innovation tempo for that product levels off, mergers occur, with resulting economies of scale, making it extremely difficult for independent producers to succeed by producing that product.]    

TSW:  "... hundreds of millions suffered and millions died as the 'invisible hand of capital' transformed the planet."

BW: That's a gross exaggeration, because many millions more enjoyed a better life. It wasn't capital formation that killed millions, but rather political power. The number of people who died from "economic exploitation" is miniscule in comparison to the number killed for political ends. Review the Cambodian and Chinese massacres.

[GB: Sorry, but I can’t seem to tell the difference between “political ends” and “economic exploitation.”]

TSW:  "But one thing is clear: an increase in population density always results in an increase in socialization."

BW: That depends on what you mean by "socialization". For example, Singapore has one of the highest population densities on Earth, but among the least socialized economies. India is probably the highest density country on earth, but their economy is quickly transforming into a free-market environment, because it works better than a politically managed economy. Is there more social interaction? Sure, but that's as much a characteristic of the voluntary free-market as it is of a coercive socialist economy.

[GB: Socialization is the answer to the perpetual political question “Should we do it together or apart?” when population densities increase (e.g., increased public spending as in modern welfare states and their complicated infrastructures). Desocialization is the answer when population densities decrease (e.g., ghost towns, struggling farm communities, and other cities abandoned by a major employer). In general, both processes are “coercive,” in that the choices are limited and always the result of a push rather than a pull. Many folks have found the voluntary free-market and socialism to be anything but “free” and “voluntary”.]

TSW:  "Despite all the indeterministic naysayers, the rise of civilization, industrialization, urbanization, and socialization is progressive - an irreversible process."

BW: Civilization "progresses", but the "progression" of more expansive (socialist) government is a hindrance, not a benefit, to the progress of mankind. The more coercive constraints on individual achievement, the less economic, intellectual, and innovative progress from individual, voluntary cooperation. Oddly, Marx and Engels believed that "capitalism" was a necessary precursor to "socialism". Arguably, the inverse has been true for Russia and China, which have progressed from socialism to capitalism, from communal property to private property. However, as long as socialists consider the transition inevitable and irreversible, they weaken their own position in the advance of economic and intellectual evolution of the world. It's a dying philosophy.

[GB: Your indeterministic analysis is true to form, illustrating why the Progressive Science Institute eschews religion, politics, and systems philosophy. Univironmental determinism attempts to present a balanced analysis in which we consider both the microcosm and the macrocosm to be equally important. While you have avoided overt religious solipsism, your belief in free will forces you to overemphasize the microcosm. The result tends to produce “microcosmic mistakes” like those committed by systems philosophers who consider the observed universe to be finite, with nothing outside of it.]

Next: The Transition from Capitalism to Socialism

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