Quotulatiousness

April 3, 2022

King James I and the problem of gold and silver thread in England

Filed under: Britain, Economics, Europe, Government, History — Tags: , , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes began to research what appeared to be a minor economic issue that very quickly took over his time going deep down the gold and silver market rabbit hole:

A hammered silver sixpence of James I dated 1603 from the first coinage with a thistle mintmark. Obverse features a right facing crowned bust with the numerals VI behind and the inscription JACOBVS*DG*ANG*SCO*FRA*ET*HIB*REX. The reverse has a shield with the royal arms and the date 1603 above. The reverse inscription is EXERGAT* DEVS*DISSIPENTVR*INIMICI.
FindID 510696 – https://finds.org.uk via Wikimedia Commons

When England’s Parliament met in 1621, it was mainly supposed to vote King James I the funds to fight a war. His daughter’s domain, the Palatinate of the Rhine, had just been invaded, and the European Protestant cause was under grave threat. As I set out two weeks ago, however, the House of Commons had seized the chance to pursue a scandal. Jealous of the Crown’s challenge to their status as local power-brokers, and hoping to embarrass the king’s favourite, the Marquess of Buckingham, MPs opened an investigation into Sir Giles Mompesson’s patent to license inns.

When it came to inns, I argued that the case against Mompesson was flimsy (making me perhaps the only person to have defended him for over four hundred years). He appears to have been a trusted and able bureaucrat, the source of his downfall being his sheer effectiveness. But the flimsiness of the case against him was not enough to stop the political witch-hunt. Next on the list was a project he had administered for making gold and silver thread.

It sounds obscure, and I was fully expecting to write up a short overview of a niche industry that just happened to be thrust into the limelight of 1620s politics. That was a month ago, when I first started drafting this piece. But pulling on the golden thread revealed a desperate, decade-long battle between the City and the Crown, over who would get to control the financial stability of the realm. I’m sorry for the delay in publishing it, but I hope I’ve made it worth the wait.

April 2, 2022

QotD: The pre-modern farming household

Filed under: China, Economics, Europe, History, Quotations — Tags: , , , , , , — Nicholas @ 01:00

Looking at our peasant household, what we generally have are large families on small farms. The households in these farms were not generally nuclear households, but extended ones. Pre-Han Chinese documents assume a household to include three generations: two elderly parents, their son, his wife, and their four children (eight individuals total). Ptolemaic and Roman census data reveal a bewildering array of composite families, including multi-generational homes, but also households composed of multiple nuclear families of siblings (so a man, his wife, his brother and then brother’s wife and their children, for instance), and so on. Normal family units tended to be around eight individuals, but with wide variation (for comparison, the average household size in the United States for a family is 3.14).

At the same time that households were large (by modern standards), the farms they tilled were, by modern standards, very small. The normal size of a Roman household small farm is generally estimated between 5 and 8 iugera (a Roman measurement of land, roughly 3 to 5 acres); in pre-Han Northern China (where wheat and millet, not rice, were the staple crops), the figure was “one hundred mu (4.764 acres)” – essentially the same. In Languedoc, a study of Saint-Thibery in 1460 showed 118 households (out of 189) on farms of less than 20 setérée (12 acres or so; the setérée appears to be an inexact unit of measurement); 96 of them were on less than 10 setérée (about 6 acres). So while there is a lot of variation, by and large it seems like the largest cluster of household farms tend to be around 3 to 8 acres or so; 5 acre farms are a good “average” small farm.

This coincidence of normal farm size and family size is not an accident, but essentially represents multi-generational family units occupying the smallest possible farms which could support them. The pressures that produce this result are not hard to grasp: families with multiple children and a farm large enough to split between them might do so, while families without enough land to split are likely to cluster around the farm they have. Pre-modern societies typically have only limited opportunities for wage labor (which are often lower status and worse in conditions than peasant farming!), so if the extended family unit can cluster on a single farm too small to split up, it will (with exception for the occasional adventurous type who sets off for high-risk occupations like soldier or bandit).

Now to be clear that doesn’t mean the farm sizes are uniform, because they aren’t. There is tremendous variation and obviously the difference between a 10 acre small farm and a 5 acre small farm is half of the farm. Moreover, in most of the communities you will have significant gaps between the poor peasants (whose farms are often very small, even by these measures), the average peasant farmer, and “rich peasants” who might have a somewhat (but often not massively so) larger farm and access to more farming capital (particularly draft animals). […] Nevertheless, what I want to stress is that these fairly small – 3-8 acres of so – farms with an extended family unit on it make up the vast majority of farming households and most of the rural population, even if they do not control most of the land (for instance in that Languedoc village, more than half of the land was held by households with more than 20 setérée a piece, so a handful of those “rich peasants” with larger accumulations effectively dominated the village’s landholding […]).

This is our workforce and we’re going to spend this entire essay talking about them. Why? Because these folks – these farmers – make up the majority of the population of basically all agrarian societies in the pre-modern period. And when I say “the majority” I mean the vast majority, on the order of 80-90% in many cases.

Bret Devereaux, “Collections: Bread, How Did They Make It? Part I: Farmers!”, A collection of Unmitigated Pedantry, 2020-07-24.

March 31, 2022

QotD: Nixon’s 1971 gamble to win re-election also tanked the economy for a full decade

Filed under: Economics, Government, History, Quotations, USA — Tags: , , , , , — Nicholas @ 01:00

[In 1971, economist Herb] Stein was saying aloud what they all knew. Prettifying a political grab by dressing it as an economic rescue was precisely the kind of action against which eminences like Burns warned foreign governments when they made grand speeches abroad. Nixon was indeed now preparing to do what Harold Wilson had done in 1967: disingenuously pretend that devaluing a currency would not affect the consumer. Stimulating the economy in this way might win Nixon the election, but inflation would eventually explode, as Friedman sometimes said, like a closed pot over high heat. Wage and price controls and taxes on imports could make the kind of growth America was accustomed to, the old bonanza, disappear for years, even a decade. True scarcity of key goods might suddenly become the rule. And that was true no matter how many times that cowboy Connally went around bragging about tariffs and telling others that America was “the strongest economy on earth”.

[…]

The 1971 run on American gold also, however, reflected foreigners’ insight. Outsiders knew a tipping point when they saw one. America had moved closer to Michael Harrington’s socialism than even Harrington understood. The United States had locked itself into social spending promises that might never be outgrown. Today, interest in Bitcoin and other cryptocurrencies serves as a measure of markets’ and individuals’ distrust of the U.S. dollar. In those days there was no Bitcoin, but gold played a similar role. The dollar was the common stock of America, and foreigners used gold to short it.

The disastrous performance of the U.S. economy in the following years proved the foreigners’ 1971 wager correct. To pay for its Great Society commitments, the U.S. government in the next decade found itself forced to set taxes so high that it further suppressed the commercialization of innovation. Products that could have been developed from patents awarded in the 1960s remained on the researchers’ shelves. Today we assume all markets will rebound given a decade. But there was to be no 1970s rebound for the Dow Jones Average. The Dow flirted with the 1,000 level throughout the decade, but did not cross the line definitively until 1982, an astonishingly long period to stagnate, nearly a generation. While markets languished, unemployment for all Americans rose. High prices, high interest rates, and federal budget deficits plagued the nation. “Guns and butter” had proved too expensive, but so indeed had butter alone. The 1960s commitments required spending that, then and down the decades, would be far greater than for Vietnam or most other wars. Those on the far left who had originally pushed for aggressive public-sector expansion had achieved what they sought, to subordinate the private sector. In 1977, Harrington actually titled a new book The Twilight of Capitalism.

Those who had counted on the private sector to sustain prosperity saw they had expected too much. The nation’s confidence evaporated. Indeed, by the late 1970s, President Jimmy Carter felt the need to undertake a national campaign to restore confidence, the kind of campaign Franklin Roosevelt had launched in response to the Great Depression. From being a nation that could afford everything, America morphed into a country that could afford nothing, a place where the president warned citizens to set their living room thermostats to sixty-five in January, or face catastrophe.

In a supreme irony, many of the people who caused the economic damage found themselves mired in the dirty work of reversing what they had wrought. The task of reducing inflation through punishing interest rates fell to Paul Volcker, who as a junior official aided leaders in the 1971 decisions that triggered the 1970s inflation in the first place. Mortgage rates rose to today incredible-sounding levels, over 15 percent. In the 1980s, the same John Connally who as treasury secretary in 1971 pounded on Nixon’s desk for populist measures that ensured an economic quagmire, went bankrupt, a casualty of the mess he had helped to create.

Amity Schlaes, Great Society: A New History, 2019.

March 29, 2022

Abandoned: How The Beeching Report Decimated Britain’s Railways | Timeline

Filed under: Britain, Economics, History, Railways — Tags: , , , , , , — Nicholas @ 04:00

Timeline – World History Documentaries
Published 15 May 2019

Travel journalist Simon Calder takes a journey from across the south of England — by bike, rail and car. In this documentary film, Simon explores the legacy of the Beeching railway cuts. He examines the arguments for reopening some of the branch lines axed in the 1960s.

It’s like Netflix for history … Sign up to History Hit, the world’s best history documentary service, at a huge discount using the code ‘TIMELINE‘ —ᐳ http://bit.ly/3a7ambu

You can find more from us on:

https://www.instagram.com/timelineWH

This channel is part of the History Hit Network. Any queries, please contact owned-enquiries@littledotstudios.com

March 22, 2022

West Germany’s Wirtschaftwunder — the staggering economic postwar recovery

Filed under: Economics, Germany, History, USA — Tags: , , , , , , — Nicholas @ 03:00

Christian Monson debunks the common tale taught in western schools of reason for the amazing recovery of West Germany’s economy after World War Two:

Occupation zone borders in Germany, 1947. The territories east of the Oder-Neisse line, under Polish and Soviet administration/annexation, are shown as cream as is the likewise detached Saar protectorate. Berlin is the multinational area within the Soviet zone.

Image based on map data of the IEG-Maps project (Andreas Kunz, B. Johnen, and Joachim Robert Moeschl of the University of Mainz) — www.ieg-maps.uni-mainz.de, via Wikimedia Commons.

This “economic miracle” is commonly referred to as die Wirtschaftswunder. But how did Germany go from rubble to riches in just a decade while neutral countries like Spain merely treaded economic water? If you ask your average American history student, they will say the Marshall Plan, of course!

Unfortunately, the ubiquity of the myth that the Marshall Plan rebuilt Germany is proof that state-controlled education favors propaganda over economic literacy. Despite the fact that most modern historians don’t give the Marshall Plan much credit at all for rebuilding Germany and attribute to it less than 5 percent of Germany’s national income during its implementation, standard history textbooks still place it at the forefront of the discussion about post-war reconstruction.

Consider this section from McDougal Littell’s World History (p. 968), the textbook I was given in high school:

    This assistance program, called the Marshall Plan, would provide food, machinery, and other materials to rebuild Western Europe. As Congress debated the $12.5 billion program in 1948, the Communists seized power in Czechoslovakia. Congress immediately voted approval. The plan was a spectacular success.

Of course, the textbook makes no mention of the actual cause of the Wirtschaftwunder: sound economic policy. That’s because, for the state, the Marshall Plan makes great statist mythology.

Not only is it frequently brought up to justify the United States getting involved in foreign conflicts, but it simply gives support for central planning. Just look at the economic miracle the government was able to create with easy credit, they say.

And of course, admitting that the billions of dollars pumped into Germany after WWII accomplished next to nothing, especially when compared to something as simple as sound money, would be tantamount to admitting that the government spends most of its time making itself needed when it isn’t and thereby doing little besides getting in the way.

Credit for the turnaround should be accorded to Ludwig Erhard, according to Alasdair Macleod at the Cobden Centre:

Anyone who favours regulation needs to explain away Germany’s post-war success. Her economy had been destroyed, firstly by the Nazi war machine, and then by Allied bombing. We easily forget the state of ruin the country was in, with people in the towns and cities actually starving in the post-war aftermath. The joint British and American military solution was to extend and intensify war-time rationing and throw Marshall aid at the problem.

Then a man called Ludwig Erhard was appointed director of economics by the Bizonal Economic Council, in effect he became finance minister. He decided, against British and American misgivings, as well as opposition from the newly-recreated Social Democrats, to do away with price controls and rationing, which he did in 1948. These moves followed his currency reform that June, which contracted the money supply by about 90%. He also slashed income tax from 85% to 18% on annual incomes over Dm2,500 (US$595 equivalent).

Economists of the Austrian school would comprehend and recommend this strategy, but it goes wholly against the bureaucratic grain. General Lucius Clay, who was the military governor of the US Zone, and to whom Erhard reported, is said to have asked him, “Herr Erhard, my advisers tell me what you have done is a terrible mistake. What do you say to that?”

Erhard replied, “Herr General, pay no attention to them! My advisers tell me the same thing.”

About the same time, a US Colonel confronted Erhard: “How dare you relax our rationing system, when there is a widespread food shortage?”

Erhard replied, “I have not relaxed rationing, I have abolished it. Henceforth the only rationing ticket the people will need will be the deutschemarks. And they will work hard to get those deutschemarks, just wait and see.”

The US Colonel did not have to wait long. According to contemporary accounts, within days of Erhard’s currency reform, shops filled with goods as people realised the money they sold them for would retain its value. People no longer needed to forage for the basics in life, so absenteeism from work halved, and industrial output rose more than 50% in the second half of 1948 alone.

March 21, 2022

For some reason, Canadians’ interest in alternative currencies has risen substantially since February

Filed under: Cancon, Economics, Government, Technology — Tags: , , , , — Nicholas @ 03:00

I’m far from alone in taking the Canadian government’s absurd over-reaction to the Freedom Convoy 2022 political protest in February as a reason to be concerned about the Canadian banking system. Until then I’d paid very little attention to alternative currency options like Bitcoin and the like, but I now understand that they may be a key element in future financial planning. At Quillette, Jonathan Kay explains that he realized at the same time he needed to know much more about crypto:

“Bitcoin – from WSJ” by MarkGregory007 is licensed under CC BY-NC-SA 2.0

On February 15th, following weeks of anti-vaccine-mandate protests in downtown Ottawa, Justin Trudeau lurched from complete inaction to absurd overreaction by declaring a national emergency. One effect of this was that banks were suddenly authorized to freeze the personal assets of citizens linked with the protests, civil liberties be damned. Around the same time, moreover, hackers acquired and published identifying information associated with thousands of people who’d donated money to the protest movement. Rather than denounce this apparent criminal data breach, many public figures — including Gerald Butts, who’d been Trudeau’s right-hand man before resigning amid scandal in 2019 — actually celebrated this doxxing. Some media outlets even tried to mine the dox information for clickbait before being stung by a public backlash. While I hadn’t donated to the Freedom Convoy movement, I was sufficiently appalled by these developments that I started educating myself about how one might donate to a similar cause without government officials and social-media hyenas exploiting these transactions as a pretext to attack my assets and reputation.

The easiest way to get into the crypto market, I learned, is simply to open an account at an exchange platform such as Coinbase or Wealthsimple. But while they’re easy to use, exchange platforms also generally require clients to supply government-issued ID when they secure their accounts, and transactions are traceable by authorities. To assure myself of real anonymity and theft-protection, my tutor instructed me, a better (if more complex) option is “cold storage”. This is a real physical device — in my case, something called a Ledger — that acts as a personal crypto wallet.

My Ledger (which looks like a large USB key drive) contains the data required to generate the “private keys” (which look like long passwords, though that isn’t quite what they are) that allow me to send my crypto to other people. And that spending can be done only in those moments when the device is connected to the Internet, after which it can be relegated to a drawer or safe (thus the metaphorical concept of “cold storage”). On the other hand, I can receive money even if the Ledger is offline, so long as the sender has my public key, which (unlike a private key) is generally safe to give to others (such as, say, a prospective donor to any charitable cause that I might establish).

Bitcoin’s basic mechanics were set out in 2009 by the much-mythologized pseudonymous author (or collective) known as “Satoshi Nakamoto”. In a legendary white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System, Satoshi describes the newly conceived electronic coin as consisting of a chain of digital signatures (a blockchain) that build one upon the next through a mathematical mechanism known as a cryptographic hash function — a one-way function whose output doesn’t expose the original private key to reverse-engineering. So once a bitcoin transaction is recorded and added in verified form to the blockchain by everyone — this being the “public distributed ledger” that bitcoin users are part of — the transaction can’t be erased or reversed (with one important theoretical exception, described later on).

Image contained in Bitcoin: A Peer-to-Peer Electronic Cash System, demonstrating the use of public and private keys to verify and sign bitcoin transactions.

Of course, you don’t need to understand how this cryptography works to use cryptocurrency. But it is worth getting your head around an important concept that fundamentally separates crypto from conventional assets such as, say, money that sits in a bank account. Your bank account number doesn’t have any value in and of itself: It’s just an institutional convenience that tells you and your bank where your actual money’s been filed (which is why that account number sits in plain sight on every physical check you sign, assuming you still use checks). But in the case of bitcoin, a private key basically is money — in the sense that anyone with access to such a key can spend the associated funds. And so if you lose your private-key information, or it gets stolen by a thief, there’s no 1-800 helpdesk number. It’s gone forever.

March 20, 2022

Florida’s new passenger rail service

Filed under: Business, Economics, Government, Railways, USA — Tags: , , , , , — Nicholas @ 03:00

Thomas Walker-Werth contrasts the different experiences of California and Florida in trying to build new passenger railway services:

“BrightLine – The Return of FEC passenger service” by BBT609 is licensed under CC BY 2.0

When the Federal Government ordered the construction of the Interstate Highway System in the 1950s and 1960s (at a cost to taxpayers of roughly $580 billion in 2022 dollars), it all but killed America’s privately operated passenger railroads. Since then, rail travel in America has mostly consisted of government-subsidized Amtrak services of deteriorating quality that amble across the country, catering to a niche market of leisure travelers and those with no other options. On the busy Northeast Corridor between Boston and Washington D.C. there is still enough demand to operate a busy, profitable service, but elsewhere Amtrak’s services are too slow, inconvenient, and infrequent to effectively compete with highways and airlines.

But with gas prices rising and traffic congestion strangling many American cities, passengers, investors, and government planners are all reconsidering railroads. Several new projects have sprung up across the country, aiming to link major cities a few hundred miles apart, where a train might provide a more convenient journey than a plane, car, or bus. Some of these projects are led by state governments, others by private companies. The contrast between the two is dramatic. To illuminate that difference, compare the government-run California High Speed Rail project with Brightline, a new private rail system in Florida.

Approved in 2008, California High Speed Rail (CHSR) was expected to deliver a 520-mile two-track, electrified high-speed railway on an all-new route between Los Angeles and San Francisco by 2029. Fourteen years later, CHSR is now only expected to have a 171-mile single-track section between Madera and Bakersfield will be operational by 2030. Meanwhile the project’s cost has ballooned to $80 billion from an original budget of $33 billion, and costs are expected to rise further to $100 billion, or triple the original budget.

Meanwhile in Florida, a very different kind of passenger railroad is already up and running. Brightline was launched in 2012 by the Florida East Coast Railway, a private freight railroad. Unlike CHSR, Brightline mostly uses existing routes, removing the need to acquire (or appropriate) large amounts of land. Instead of building the whole line before beginning any passenger services (as CHSR is doing), Brightline began construction on a 70-mile section from Miami to West Palm Beach in 2014 and opened it to passengers in 2018. This meant that Brightline already had an operational, revenue-producing service before embarking on the 170-mile northward extension to Orlando Airport. That extension is expected to open in 2023, and the entire project will cost about $1.75 billion, raised through private financing.

This equates to about $7.3 million per mile for Brightline, compared to $153.8 million per mile for CHSR (using the current $80 billion budget). Why will CHSR cost at least twenty times more per mile than Brightline? How has Brightline managed to deliver a high-speed intercity passenger rail system within ten years whereas CHSR needs twenty-two years to deliver an incomplete, scaled-down version of its original plan? Much of the answer comes down to the fundamental nature of public works projects such as CHSR.

This isn’t quite a fair apples-to-apples comparison between Brightline and CHSR, as Brightline’s services will have to interact with freight trains on conventional rails while CHSR — if ever completed — will be a separate line hosting only CHSR’s own high-speed passenger trains. Brightline’s trains will probably not have the theoretical top speed that CHSR is intended to use, as the physical plant of rail lines intended for mixed-use traffic will limit the speeds due to signalling, traffic density and braking distances of the respective types of trains.

March 14, 2022

Roman Republic to Empire 04 Slavery in the Roman Republic and Empire

Filed under: Economics, Europe, Greece, History, Italy — Tags: , , , , — Nicholas @ 04:00

seangabb
Published 5 Feb 2021

[Update 2023-03-02 – Dr. Gabb took down the original posts and re-uploaded them.]

Here is the fourth lecture, which discusses the nature and extent of slavery in the Roman Empire. It begins with legal definitions and the attempted justifications by philosophers, then proceeds, via the use of slaves as workers in all occupations, including as sex objects, to the great slave revolts of the Late Republic. There is also a section on the valuation of slaves.

In this series, Sean Gabb will explain how the Roman Constitution was transformed, in just over a century, from an oligarchical republic with strong elements of democracy to a divine right military dictatorship.
(more…)

“Mister, we could use a man like Herbert Hoover Warren Harding again …”

Filed under: Economics, Government, History, USA — Tags: , , , , , , — Nicholas @ 03:00

Kind words for the oft-maligned 29th president of the United States? Daniel J. Mitchell is all over it:

Warren G. Harding, 14 June 1920.
Library of Congress control number 2016828156

Today, we’re going to celebrate the fiscal achievements of Warren Harding.

Most notably, as illustrated by this chart based on OMB data, he presided over a period of remarkable spending discipline.

Harding also launched very big — and very effective — reductions in tax rates.

And his agenda of less government and lower tax rates helped bring about a quick end to a massive economic downturn (unlike the big-government policies of Hoover and Roosevelt, which deepened and lengthened the Great Depression).

In an article for National Review last year, Kyle Smith praised President Harding’s economic stewardship.

    In a moment of national crisis, Warren G. Harding restored the economic health of the United States … America in 1921 was in a state of crisis, reeling from the worst recession in half a century, the most severe deflationary spiral on record … Unemployment, it is now estimated, stood somewhere between 8.7 and 11.7 percent as returning soldiers inflated the size of the working-age population.

    Between 1919 and August of 1921 the Dow Jones average plummeted 47 percent. Harding’s response to this emergency was largely to let the cycle play out … The recession ended in mid-year, and boom times followed. Harding and Congress cut federal spending nearly in half, from 6.5 percent of GDP to 3.5 percent. The top tax rate came down from 73 percent to 25, and the tax base broadened. Unemployment came down to an estimated 2 to 4 percent … Harding was a smashing success in a historically important role as the anti-Wilson: He restored a classically liberal, rights-focused, limited government, and deserves immense credit for the economic boom that kicked off in his first year and continued throughout the rest of the 1920s.

Smith’s article also praises Harding for reversing some of Woodrow Wilson’s most odious policies, such as racial discrimination and imprisoning political opponents (Wilson also had a terrible record on economic issues).

Of course, Harding’s term is much more often remembered for the scandals, and as most modern historians are far more interested in Woodrow Wilson’s bold progressivism they almost always decry Harding and then Coolidge for dismantling a lot of Wilson’s more enthusiastic progressive projects. Even H.L. Mencken — very much not a Wilson fan — found Harding to be not to his taste in turn:

On the question of the logical content of Dr. Harding’s harangue of last Friday, I do not presume to have views … But when it comes to the style of the great man’s discourse, I can speak with … somewhat more competence, for I have earned most of my livelihood for twenty years past by translating the bad English of a multitude of authors into measurably better English. Thus qualified professionally, I rise to pay my small tribute to Dr. Harding. Setting aside a college professor or two and half a dozen dipsomaniacal newspaper reporters, he takes the first place in my Valhalla of literati. That is, he writes the worst English that I have ever encountered. It reminds me of a string of wet sponges; it reminds me of tattered washing on the line; it reminds me of stale bean soup, of college yells, of dogs barking idiotically through endless nights. It is so bad that a sort of grandeur creeps into it. It drags itself out of the dark abysm … of pish, and crawls insanely up to the topmost pinnacle of posh. It is rumble and bumble. It is flap and doodle. It is balder and dash.

March 10, 2022

QotD: Orwell on Capitalism, Socialism, and Fascism

Filed under: Economics, Germany, History, Politics, Quotations, WW2 — Tags: , , , , — Nicholas @ 01:00

Socialism is usually defined as “common ownership of the means of production”. Crudely: the State, representing the whole nation, owns everything, and everyone is a State employee. This does not mean that people are stripped of private possessions such as clothes and furniture, but it does mean that all productive goods, such as land, mines, ships and machinery, are the property of the State. The State is the sole large-scale producer. It is not certain that Socialism is in all ways superior to capitalism, but it is certain that, unlike capitalism, it can solve the problems of production and consumption. At normal times a capitalist economy can never consume all that it produces, so that there is always a wasted surplus (wheat burned in furnaces, herrings dumped back into the sea, etc., etc.) and always unemployment. In time of war, on the other hand, it has difficulty in producing all that it needs, because nothing is produced unless someone sees his way to making a profit out of it. In a Socialist economy these problems do not exist. The State simply calculates what goods will be needed and does its best to produce them. Production is only limited by the amount of labour and raw materials. Money, for internal purposes, ceases to be a mysterious all-powerful thing and becomes a sort of coupon or ration-ticket, issued in sufficient quantities to buy up such consumption goods as may be available at the moment.

However, it has become clear in the last few years that “common ownership of the means of production” is not in itself a sufficient definition of Socialism. One must also add the following: approximate equality of incomes (it need be no more than approximate), political democracy, and abolition of all hereditary privilege, especially in education. These are simply the necessary safeguards against the reappearance of a class-system. Centralized ownership has very little meaning unless the mass of the people are living roughly upon an equal level, and have some kind of control over the government. “The State” may come to mean no more than a self-elected political party, and oligarchy and privilege can return, based on power rather than on money.

But what then is Fascism?

Fascism, at any rate the German version, is a form of capitalism that borrows from Socialism just such features as will make it efficient for war purposes. Internally, Germany has a good deal in common with a Socialist state. Ownership has never been abolished, there are still capitalists and workers, and – this is the important point, and the real reason why rich men all over the world tend to sympathize with Fascism – generally speaking the same people are capitalists and the same people workers as before the Nazi revolution. But at the same time the State, which is simply the Nazi Party, is in control of everything. It controls investment, raw materials, rates of interest, working hours, wages. The factory owner still owns his factory, but he is for practical purposes reduced to the status of a manager. Everyone is in effect a State employee, though the salaries vary very greatly. The mere efficiency of such a system, the elimination of waste and obstruction, is obvious. In seven years it has built up the most powerful war machine the world has ever seen.

But the idea underlying Fascism is irreconcilably different from that which underlies Socialism. Socialism aims, ultimately, at a world-state of free and equal human beings. It takes the equality of human rights for granted. Nazism assumes just the opposite. The driving force behind the Nazi movement is the belief in human inequality, the superiority of Germans to all other races, the right of Germany to rule the world. Outside the German Reich it does not recognize any obligations. Eminent Nazi professors have “proved” over and over again that only Nordic man is fully human, have even mooted the idea that non-Nordic peoples (such as ourselves) can interbreed with gorillas! Therefore, while a species of war-Socialism exists within the German state, its attitude towards conquered nations is frankly that of an exploiter. The function of the Czechs, Poles, French, etc., is simply to produce such goods as Germany may need, and get in return just as little as will keep them from open rebellion. If we are conquered, our job will probably be to manufacture weapons for Hitler’s forthcoming wars with Russia and America. The Nazis aim, in effect, at setting up a kind of caste system, with four main castes corresponding rather closely to those of the Hindu religion. At the top comes the Nazi party, second come the mass of the German people, third come the conquered European populations. Fourth and last are to come the coloured peoples, the “semi-apes” as Hitler calls them, who are to be reduced quite openly to slavery.

However horrible this system may seem to us, it works. It works because it is a planned system geared to a definite purpose, world-conquest, and not allowing any private interest, either of capitalist or worker, to stand in its way. British capitalism does not work, because it is a competitive system in which private profit is and must be the main objective. It is a system in which all the forces are pulling in opposite directions and the interests of the individual are as often as not totally opposed to those of the State.

George Orwell, “The Lion And The Unicorn: Socialism and the English Genius”, 1941-02-19.

March 7, 2022

QotD: Historical fiction and fantasy works usually leave out the vast majority of the people who did all the work

Filed under: Books, Economics, History, Quotations — Tags: , , , , , — Nicholas @ 01:00

… there is a tendency when popular culture represents the past to erase not merely the farmers, but most of the commons generally. Castles seem to be filled with a few servants, a whole bunch of knights and lords and perhaps, if we are lucky, a single blacksmith that somehow makes all of their tools.

But the actual human landscape of the pre-modern period was defined – in agrarian societies, at least – by vast numbers of farms and farmers. Their work proceeded on this cyclical basis, from plowing to sowing to weeding to harvesting and threshing to storage and then back again. Religious observances and social festivals were in turn organized around that calendar (it is not an accident how many Holy Days and big festivals seem to cluster around the harvest season in late Autumn/early Winter, or in Spring). The uneven labor demands of this cycle (intense in plowing and reaping, but easier in between) in turn also provided for the background hum of much early urban life, where the “cities” were for the most part just large towns surrounded by farmland (where often the folks living in the cities might work farmland just outside of the gates). People looked forward to festivals and events organized along the agricultural calendar, to the opportunities a good harvest might provide them to do things like get married or expand their farms. The human drama that defines our lives was no less real for the men and women who toiled in the fields or the farmhouses.

And of course all of this activity was necessary to support literally any other kind of activity.

Bret Devereaux, “Collections: Bread, How Did They Make It? Part III: Actually Farming”, A Collection of Unmitigated Pedantry, 2020-08-06.

March 2, 2022

QotD: George Orwell was a dedicated socialist

Filed under: Britain, Economics, History, Quotations, WW2 — Tags: , , — Nicholas @ 01:00

I began this book to the tune of German bombs, and I begin this second chapter in the added racket of the barrage. The yellow gun-flashes are lighting the sky, the splinters are rattling on the house-tops, and London Bridge is falling down, falling down, falling down. Anyone able to read a map knows that we are in deadly danger. I do not mean that we are beaten or need be beaten. Almost certainly the outcome depends on our own will. But at this moment we are in the soup, full fathom five, and we have been brought there by follies which we are still committing and which will drown us altogether if we do not mend our ways quickly.

What this war has demonstrated is that private capitalism – that is, an economic system in which land, factories, mines and transport are owned privately and operated solely for profit – does not work. It cannot deliver the goods. This fact had been known to millions of people for years past, but nothing ever came of it, because there was no real urge from below to alter the system, and those at the top had trained themselves to be impenetrably stupid on just this point. Argument and propaganda got one nowhere. The lords of property simply sat on their bottoms and proclaimed that all was for the best. Hitler’s conquest of Europe, however, was a physical debunking of capitalism. War, for all its evil, is at any rate an unanswerable test of strength, like a try-your-grip machine. Great strength returns the penny, and there is no way of faking the result.

When the nautical screw was first invented, there was a controversy that lasted for years as to whether screw-steamers or paddle-steamers were better. The paddle-steamers, like all obsolete things, had their champions, who supported them by ingenious arguments. Finally, however, a distinguished admiral tied a screw-steamer and a paddle-steamer of equal horsepower stern to stern and set their engines running. That settled the question once and for all. And it was something similar that happened on the fields of Norway and of Flanders. Once and for all it was proved that a planned economy is stronger than a planless one.

George Orwell, “The Lion And The Unicorn: Socialism and the English Genius”, 1941-02-19.

March 1, 2022

Genocide in Ukraine: The Holodomor | Into Context | War in Ukraine 01

Filed under: Economics, History, Russia — Tags: , , , , , — Nicholas @ 06:00

TimeGhost History
Published 28 Feb 2022

What do you get when you combine vigorous grain-tax policies, bad harvests with Stalin’s fear and animosity for the rural population of Ukraine? A man-created murder famine, designed to kill millions of Ukrainian men, women and children.
(more…)

February 28, 2022

QotD: Passengers versus freight in railway efficiency terms

Filed under: Economics, Europe, Quotations, Railways, USA — Tags: , — Nicholas @ 01:00

First, consider the last time you were on a passenger train. Add up the weight of all the folks in your car. Do you think they weighed more or less than the car itself? Unless you were packed into a subway train with Japanese sumo wrestlers, the answer is that the weight of the car dwarfs that of the passengers it is carrying. The average Amtrak passenger car apparently weighs about 65 tons (my guess is a high speed rail car weighs more). The capacity of a coach is 70-80 passengers, which at an average adult weight of 140 pounds yields a maximum passenger weight per car of 5.6 tons. This means that just 8% of the fuel in a passenger train is being used to move people — the rest goes into moving the train itself.

Now consider a freight train. The typical car weighs 25-30 tons empty and can carry between 70 and 120 tons of cargo. This means that 70-80% of the fuel in a freight train is being used to move the cargo.

Now you have to take me on faith on one statement — it is really hard, in fact close to impossible, to optimize a rail system for both passengers and freight. In the extreme of high speed rail, passenger trains required separate dedicated tracks. Most rail systems, even when they serve both sorts of traffic, generally prioritize one or the other. So, if you wanted to save energy and had to pick, which would you choose — focusing on freight or focusing on passengers? Oh and by the way, if you want to make it more personal, throw in a consideration of which you would rather have next to you on crowded roads, another car or another freight truck?

This is why the supposedly-green folks’ denigrating of US rail is so crazy to me. The US rails system makes at least as much sense as the European system, even before you consider that it was mostly privately funded and runs without the subsidies that are necessary to keep European rail running. Yes, as an American tourist travelling in Europe, the European rails system is great. Agreed. I use it every time I go there. I have to assume that this elite tourist experience must be part of why folks ignore the basic science here.

Warren Meyer, “A Reminder: Why the US Rail System Is At Least as Good As the European System if You Care About Energy Use”, Coyote Blog, 2018-05-25.

February 16, 2022

Germany’s dual economy during WW2 (and why Himmler would have succeeded Hitler if the Nazis had won WW2)

Filed under: Bureaucracy, Economics, Germany, History, Military, Russia, WW2 — Tags: , , , , , , , , — Nicholas @ 03:00

At Founding Questions, Severian looks at the way the Nazi economy was actually two entities — the “wartime” economy and the effectively separate SS economy under the control of Heinrich Himmler:

Reichsführer SS Heinrich Himmler, 1938.
German Federa Archive via Wikimedia Commons.

Here’s where the Nazis really blew it. “Nazism” should really be called “Hitlerism”, as it was a true cult of personality; there was no ideology without the specific individual man. That’s the tension at the heart of any collectivist ideology — somebody’s got to be The Boss, however temporarily — but Nazi Germany suffered it worse than most. Had the Nazis won the war, the bloodbath at the top would’ve been as spectacular per capita as the war itself. As thoroughgoing Social Darwinists, they only had one possible principle of succession …

Let’s provisionally call that the first consequence of an ideology in power: The personal is the political and vice versa. That seems trite, I realize, but I’m putting it here to emphasize its literalness – in an ideological state, building your own “affinity”, Bastard Feudalism-style, just IS politics. There’s no other possible political activity. And as much as the Nazis seemed to have screwed it up by going all in on the Fuhrerprinzip at the very top, their out-and-proud Organizational Darwinism (for lack of a better term) made them super-efficient at the lower levels.

Let’s bring Khrushchev back in. In many ways, he’s the Soviet Himmler. He was one of Stalin’s right hand men throughout the war, but somehow didn’t get tagged as a major player in the succession crisis until it was too late for all the other contenders for the purple to take effective countermeasures. In the same way, Hitler did announce a successor, sort of. In fact he did it twice: Before the war, it was Rudolf Hess; during the war, Hermann Goering. Neither of those guys had anything approaching the power Himmler had, but like Khrushchev, his personality was such that the other bigshots couldn’t help overlooking him. Just as the rest of the Politburo couldn’t wrap their heads around the idea of this uncouth quasi-Ukrainian peasant being a major threat, so the rest of the Nazi leaders couldn’t help seeing Himmler as this fussy little file clerk.

It’s a hell of a trick, and I’ll admit, I’m buffaloed. Even if Himmler (Khrushchev) was one hell of an actor, and the egos on the other top Nazis (Soviets) were gravity-defying, they still should’ve been able to see that this fussy little file clerk had some seriously hard boys working for him. Reinhard Heydrich was as ruthless a fuck as was ever born, and Himmler kept him in check. Ditto barbarians like Odilo Globocnik and Erich von dem Bach-Zelewski — they don’t come any nastier than those two, yet Himmler managed them easily. What other conclusion can you possibly draw about Himmler, other than that he was nastier than all of them put together? And yet, apparently, nobody did …

The only explanation for this that I can think of is the Nazis’ ideologization of governmental structures. As opposed to the Soviet experience, where the Party and the Bureaucracy were supposed to be, and often actually were, distinct. After some disastrous experiments with demoting technical experts to field hands, and vice versa, the Russian Communists learned that ideological correctness and “soviet power” does not, in fact, obviate the need for stuff like math. (See also: Mao’s backyard blast furnaces). So the Soviets made sure to separate what they called the “technical intelligentsia” from the Party. The head honcho at Gosplan, Gossnab, etc. would be a Party hack from way back, of course, but the actual brainworkers wouldn’t be. I don’t know just how many of them had Party membership cards, or if any of them did, but nobody I know of rose through the Party’s ranks via Gosplan.

Once a Gosplanner, always a Gosplanner. The technical intelligentsia got all kinds of perks in the Soviet system, but one thing they did not do was get perks inside the Party. You can be a technical expert, or you can be an up-and-coming Party man, but you can’t be both.

The Nazis did the exact opposite of that. The way the Third Reich actually functioned is still opaque in a lot of ways (especially to non-specialists), and of course the pressures of wartime forced a lot of ad hoc measures, but it seems like the SS was supposed to be a sort of All-Purpose Expert Corps. Not only did they have their own army and intelligence service, but they had their own economy — the brief history of the Third Reich makes a lot more sense when you realize that half or more of the official Reich economy was hamstrung by the informal but very real SS economy, operating largely (but far from exclusively) through the labor camps.

Indeed, the SS had their own administration. As incredible as it seems, the Nazis had no grand plan for what to do once they’d conquered Europe. Himmler did, at least as far as the East was concerned, and he tried his damnedest to put it into action in Poland (which is why the General Government was so legendarily brutal). Hitler apparently thought in terms of Germany’s lost late 19th century colonies, when he bothered to think about it at all … which wasn’t often. In his typical Fuhrer-riffic style, he just ignored the problem, trusting to Organizational Darwinism to sort it out …

… which is where the All-Purpose Experts of the SS stepped in. The General Government, for instance, was headed by a civilian lawyer, Hans Frank, but the day to day governance largely fell to the SS, because that’s who stepped up. Poland was an occupied zone, with vital war industries, but it was far behind the front for most of the war; the army couldn’t waste vital manpower garrisoning it. Thus the SSPF (the SS and Police Leader) stepped in, drawing manpower as needed from a wide variety of sources — the camp guards, the Wehrmacht (when garrison troops were available, and when they could wrangle them from the various army commanders), the civilian police, the “General SS”, and so on.

The details aren’t nearly as important as the big picture, which is: Unlike the technical intelligentsia in the Soviet Union, members of the SS could climb to the highest ranks of the Party. Indeed they were expected to: the SS was rapidly becoming a Party-within-the-Party at the outbreak of the war, not least because Himmler awarded a “ceremonial” SS rank to anyone who mattered politically in the various departments. The savvier guys refused the “honor,” of course, because they didn’t want to be subordinate to Himmler, even ceremonially, but many didn’t. Which meant that had the Nazis won the war, not only would Himmler have been the next Fuhrer, but the SS would’ve closed ranks, essentially taking over The Party — they’d be the Inner Party, as opposed to the “mere Nazis” of the Outer Party.

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