Mittwoch, 25. April 2012

AW auf: TINSTAAFL and the Welfare State

This is an answer to TINSTAAFL and the Welfare State by Klaus Kastner Blog TINSTAAFL (there is no such thing as a free lunch)

Hello Mr. Kastner,

I will take up the invitation for discussion and decided to enter into it here.

Concerning this article I will start with following. While in social sciences other than economics the idea that there is something like a "primitive society" has long been discarded it is common to use it in economic circles.

It is a huge flaw of economics to still live in the chauvinistic terms of the 19th century scholars like Adam Smith. Especially if ,when looking closely, we find that our society is not a very bright one, but rather the most stupid wasteful society that probably ever was.

But this is just the beginning of what I will guess will be an interesting argument. My thesis is that the existing economic principles that rule our policies are there for no other reason as that there is something like a free lunch since about 150 years, oil.

The treasure in the cellar:

As you may already know after reading my blog, I do admire the teachings of Marvin Harris and his Cultural Materialism. If you follow the link to Marvin Harris you will read that there is significant reason to believe that Human culture is in fact largely defined by the amount of energy it has to its disposal.

Interestingly, what we call economics as a science today, established itself at a time when humans began to exploit the energy that is concentrated in fossil fuels. With exploiting this virtually free energy several things happened to our society simultaneously.

It started an extraordinary rise to all productivity that finally resulted in industrial society. Since the beginning of the industrial age population has risen exponentially worldwide. Also, the feudal system that dominated preindustrial societies came to an end. A new form of stratified society started to emerge.

The structural class of the industrial worker came into existence as productivity of agriculture and rural population raised simultaneously and led to a rural exodus. Urban metropolitan city sprawls like Victorian Age London grew to house this new class of laborers.

The rise of the capitalists
Almost free energy and rising efficiency also gave way to another new development. While in preindustrial societies, the number of people who could live just from holding money was severely limited by the low surplus that could be sustainably produced; the amount of surplus now available gave rise to another class, the capitalist.

The whole Idea of somebody living from the gains of his capital was abhorrent at all other ages. Even in the feudal system there was some kind of legitimacy to the ruling class (given by god and inheritance). The usurer is somebody shunned by virtually all societies predating the industrial age and by almost all religious and ethical believes.

The capitalist on the other hand, had to his side the economist. He was the high priest of the new believe system,  that made "earning money by doing nothing", as something not only morally acceptable, but the ultimate goal of all strife in a society, where the individual was being reduced to an homo oeconomicus, a being that is only motivated by personal monetary gain.

Not surprisingly this new development led to the rise to several counter movements like anarchism, socialism and communism. I am not saying that the conflict between the haves and have nots, the debtors and the creditors has not been the basis of all revolutions at all ages. There is a significant difference in the struggles in the 19th and 20th century whatsoever.

It settled on a middle ground that allowed the capitalists not only to hold on to the wealth they have gathered, but also convinced the majority of the people that they also could benefit from the capitalist system. Main reason for this is (by the help of protestant religious believe) that a devious myth was invented. It is the myth of vertical social mobility (also called “the american dream”).

Why a myth? Social studies show that there is a huge disparity between actual social mobility and its perception. (i.e. this one). What this myth does is not only giving legitimacy for those who made it, it also suggests that the poor are poor because of their own fault. Propaganda (also called advertising or TV.) sees to it that this myth is always circulated in public space.

This myth alone is not enough to explain the meekness of the poor. Most of the time during the 19th and the 20th century, small concessions to the poor had to be made. It did not hurt the capitalists much, because due to the never before achieved “economic growth” in these times, the amount of surplus to be harvested ans shared, grew evermore.

Growth, as economic sciences defines it, is the growth of total production and services. As we have seen in Marvin Harris analysis, the amount goods and services produced is limited by the energy that is produced by a society. Only that this energy that drove our siciety has not been produced, it has been found as a treasure in the cellar. It virtually just needed to be picked up or pumped up from our earth’s crust.

There was a free lunch, but it is over:

This treasure has been wasted by the generations that found it. It has been used to provide the few that managed to rake in the harvest to live the free lunch. Contrary to the believe of many socialists, this free lunch has not been served by “the working class”, or not more or less than during the thousands of years before. The amount of energy people put into production of goods today is actually very minimal. This free lunch has been stolen from future generations.

So, economy, capitalism, industrial age, and the population we now are able to provide for, all of it is a result of the exploitation of fossil fuels and the riches of future generations. The generations that have thrived in the 20th century have left us with an unsolvable mess at our doorstep.

As obvious from reading my blog, I am convinced that the time of cheap oil has come to an end NOW and my arguments for that are very good. The political system, the whole believe system, all values we cherish seem to circle around the concept of growth. What if that growth has finally stopped, like for a very long time, if not forever?

Why, you asked me, do I have such a grim outlook on our future? Read part 2 for an answer to this question.



6 Kommentare:

  1. 1 or 2
    Since your blog is in German, I leave it up to you whether you want to exchange in English or German. Right now I will stick to English.

    Upfront, the subject of my paper were the unintended consequences of the welfare state, if there are any, and not TINSTAAFL per se. I argued that the welfare state as lived in many European countries (my paper was written in 1996) tended to slow down the 2 forces which have historically driven the betterment of society – the reasonable competition of thought and performance – and that the most unintended consequence of the welfare state was a deterioration in the quality of society as exemplified primarily by a reduction in fairness.

    Now back to TINSTAAFL. Your arguments have opened new perspectives for me but I see them as “as well as” instead of “either/or”.

    I have spent about 20 years with Americans of Mid-Western mentality. Those are pretty common-sense down-to-earth people (see Warren Buffett). Their analogies may not meet the test of sophisticated economists but, at least to me, they always made a lot of sense. It has always helped me to try to reduce complicated matters to simple things (like the “primitive society”; sorry, I did not know that social sciences had discarded this premise). That’s not to say that all things are simple but simplicity can clear one’s perspective.

    So we both agree that there is no such thing as a free lunch except you argue that, so far, the world has gotten away with not paying for the oil-lunch; or at least not a fair price. Correct? I could live with your argument except I don’t see it as dramatic as you do.

    I agree that without energy, our modern standard of living would go out the window but even though we are addicted to oil today, I am not sure that oil cannot be replaced. First, I think the news of the world’s running out of oil is greatly exaggerated. That has been predicted for decades and yet we seem to have more proven reserves today than ever before (depending on whom you ask). However, d’accord that at some point the oil will be gone. The other question is whether the cost of oil has been “right” in the past. Probably not. In 100 years from now, people may say that our oil should have been a lot more expensive (or even rationed).

    But my major point is technology. Even though I am pretty ignorant as far as technology is concerned, I do know that technology develops exponentially. When I was young, nuclear energy was the answer to all energy needs. Today, we know differently. However, I remember reading so many articles over the years (which I obviously am in no position to recite) how alternative sources of apparently “limitless” energy are being developed (nuclear fusion for one) that I have the blind confidence in human ingenuity that energy will be available “forever” (or at least as long as the sun shines). You may believe differently but we should be able to agree that neither of us knows for sure.

  2. 2 of 2
    I have never thought about the fact that living off one’s capital may have been abhorrent in all other ages and I will need to think about this. I do, however, remember that capital and/or great wealth’s do not last. As a general rule, they have evaporated after a few generations (in Europe; in the US much more quickly). However, that is no question on my mind that today’s (widening) gap between rich and almost poor is a destructive development (but I am sure it will self-correct sooner or later).

    Your identification of social mobility as a devious myth is also news to me. If studies show that it is a myth, it must be a myth. But like with most everything else – perceptions can be more important than reality. There may not be an American Dream in reality but people who believe that there is one are happy with that. I, for one, am convinced that if I landed – even at my age – at some place in the US without a penny in my pocket, I would somehow figure out how to make a living. I might be totally surprised if I ever had to do. On the other hand, if I really believe that way it can become a self-fulfilling prophesy.

    I have recently read 2 books which I found kind of eye-opening: “The West and the Rest” by Ferguson and “Why Nations Fail” by Acemoglu/Robinson. They both trace the question why societies advance and why some advance more than others (or even fail). Ferguson defines 6 killer-apps (competition, science, property, medicine, consumption, work). Acemoglu/Robinson reduce it simply to one factor – institutions. They examine traditional theories (quality of land, geography, culture, ignorance, religion) and rule them out. Interesting, oil doesn’t come up in either book as a specific factor.

    Obviously, you think oil (and the cheap or free nature of it) is at the bottom of all of this. Maybe yes, maybe no. Certainly your generation should find out whether or not oil can be replaced with “limitless” energies and then civilization will have a moment of truth.

    1. thank you very much for your answer.

      I have already prepared a second part where I aksed my self the question I aked in the first part. Why is the future grim.

      This secod part will be on the premises that Peak Oil has already been reached. There is sadly only one real authority, the IEA, international energy agency, founded by the oecd.

      Fatih Birol, director of the IEA, admitted the peak of crude oil production has happened 2006.

      the IEA has a history of being usualy "very creful" with these prognosis and has been accused by the guardian to have intentionaly overestimated the ressources still avilable in the past.

      So you might believe it or not. My informations show otherwise and I have delved into this problems for years now.

      So I will assume Peak oil has been reached and in my next post I will state how I see the future.

    2. "I have never thought about the fact that living off one’s capital may have been abhorrent in all other ages and I will need to think about this"

      If you want to look into that i suggest another anthropologist I mentioned before.

      David Graeber has recently published a phenomenal book called "debt the first 5000 years"

    3. "Obviously, you think oil (and the cheap or free nature of it) is at the bottom of all of this. Maybe yes, maybe no. Certainly your generation should find out whether or not oil can be replaced with “limitless” energies and then civilization will have a moment of truth."

      Oil could be replaced by investing into technologies we have at our hands today. the problem is, that to do so we will need all the virtues that capitalism is lacking.

      Foresight, (meaning we should have started 20 years ago to do so) solidarity (meaning we should all commit to it) and the acceptance of losses.

      As captilaism is lacking all these traits it has not and never will be able to solve these problems.

      Also, limitless energy is not an option. there are simple physical (thermodynamic) constraints on the amount of energy we can use.

      We would be able with an effort of a scale unsurpassed in the history of mankind to come close to sustainably provide the same amount of energy that is needed to replace oil.

      Note, that to replace oil as a ressource for production of goods, transportation etc. we will have to produce at least twice the amount of energy we get by burning it.

      As we burn 86 million barrel oil every day this will require a lot of energy. As of now, even if we would pool all ressources into it, we would not be able to achieve this soon enough to stop the collapse of this civilisation.

  3. The thesis that political conomy as founded by Adam Smith and the exploitation of oil are intertwined is my own. Maybe somebody else has formulated this, but not to my knowledge.

    It is in strict adherence to cultural materialism as an heuristic though. Cultural materialism has been largely dismissed by todays social sciences and has been incorporated into more evolutionary theories of culture/macrosociology.

    I hold to the believe that developing a theory of culturs, be it in economy or anthropology is impossible. As I myself have started out with physics in the past and I feel that cultural materialism serves well for an analysis of culture.

    As in physics, where "unsolvable" or chaotic is usually the answer when studying many-body problems an energy relation helps understanding the problems without knowing much about the boundary conditions.

    It also is not that easy to untangle the many ways energy plays into our culture. I feel most social scientists without having a natural sciences background do not get the importance of energy.