Go-go capitalism operates as an ever-quickening treadmill. None of our ancestors lived in such a complicated civilisation. There are no precedents to guide us, no wisdom that wasn’t made for a simpler age. We have changed our environment more quickly than we know how to change ourselves.
In times gone by self-sustaining communities with limited transportation facilities found economic growth very difficult. Nomadic peoples have known this for millennia; they thrived because they wore their wealth as precious stones set in gold on their highly mobile, lightweight but deadly beautiful daggers. Gold and diamonds have the almost mystical quality of permanence, and a banking system based on the Gold Standard underpinned the late nineteenth century British Imperial triumph. Merchants needed their money in the bank to have a stable value1.
As the Industrial Revolution produced more than the English alone could consume, and because their manufacturers needed a range of raw materials not known in our Islands, Britain set about building colonies in those parts of the world which had resources we coveted. Colonial policy enslaved such peoples in deals which only allowed them to sell to, and buy from the mother country at prices she fixed. Such blatant unfairness was doomed to failure, especially as the English then sought to improve the lot of other people. Missionaries, teachers, doctors, surgeons and aspiring native politicians educated at Balliol College, Oxford did what the eighteenth century merchants and intelligentsia had done earlier in the Americas: they helped the people to organise themselves and practice the very techniques their English forbears had taught them and become self-governing nations in their own rights2.
Adam Smith would have watched all this with some satisfaction for this is what he proposed would have happened. Then, in the late 1980s this thinking was largely turned on its head by the application of the new communication technologies3. At its simplest level this massive improvement in the pace of transmitting and analysing data meant that successful economies were no longer those based primarily on physical goods, but on the production and application of knowledge. In the classical Adam Smith model when wheat prices rose farmers produced more; consumers then bought less and equilibrium was restored at a lower level of demand. This was a kind of ‘negative feedback’ economy, rather like a thermostat that resets to the finite constraints of supply and demand. In the new economy, where the speed of connectivity is near instantaneous, it is knowledge about alternative capacity or processes that has become infinitely more important than conventional laws of supply and demand. The metaphor of an avalanche seems to have replaced that of a thermostat4. You fancy that printing costs for a future best seller are too high in England? Well, search the web for spare capacity elsewhere; conclude a deal over the Internet; electronically transmit production-ready text, and let printing start immediately. Unwilling to pay so much for what your mother always told you were the best shoes for children, Clarks, keep the brand name and the nostalgia, but shift production to where labour is cheapest (Romania) and turn your old factory in Somerset into a theme park. Like variety in your fruit salad? Add some New Zealand kiwis which have used up more energy in being flown to England than you will gain from eating them.
Welcome to globalisation, which stimulates about $1bn more trade every hour of the day5. It’s governed by a single rule; “Do unto others what you would prefer they didn’t do to you”. We all vote for globalisation with every decision we take to buy something cheaper — which is so unfortunate for the youngster in Stroud, Somerset, who would have liked an apprenticeship as had his father as a shoemaker. Adam Smith extolled the subdivision of labour, and the need to move capital to wherever it would get the best return. But 200 years ago Adam Smith’s world was one of almost unlimited boundaries and possibilities. Our world has perhaps even more possibilities, but we are increasingly aware that it does have very real boundaries. Everything really is connected to everything, and nothing comes without a cost6.
The insatiable desire for ever bigger markets, and ever larger profits, means that international companies are involved in a vast cultural exchange, a steamroller of uniform culture which is swamping the world. The obesity of young people in Beijing feeding on endless McDonalds is shocking their grandparents, while an older generation in England who once kept fit by walking most days to the butcher, and the greengrocer, now watch their grandchildren climb into the family car for the weekly visit to the supermarket7. The impact of all this on how we think about the world and the other people who live here, is profound; “If you believe that the world is a vast larder, each item with a price, then you simply plunder it”8. Think of your supermarket on a Saturday afternoon. Then work out why all the local corner shops have closed down.
How was it that we simply came to accept such an economic model without questioning what might be its long-term implications? Every time you’re stuck in a traffic jam ponder what those endless lorries are carrying, and who they’re supplying. Surely it’s us, isn’t it? We have all unwittingly become part of this. So are we preparing children simply to fit in with such a way of life, or are we getting them to understand it, question it, and potentially to change it? David Blunkett, the Minister of Education back in 2001, was very clear about what he thought, “… the work of the Department for Education and Employment fits with a new economic imperative of supply side investment for national prosperity”9.
Thesis 77: 25th August 2006