7 February 2012

Stop Digging

Although we seem to be living in an era of forgetfulness when it comes to the insights of John Maynard Keynes, to my mind we should characterise the disastrous economic situation of the late-phrase capitalist economies in terms of a chronic failure of aggregate demand. In a famous passage in the General Theory Keynes describes how different cultures have dealt with the problem of insufficient demand:

‘Ancient Egypt was doubly fortunate, and doubtless owed to this its fabled wealth, in that it possessed two activities, namely, pyramid-building as well as the search for the precious metals, the fruits of which, since they could not serve the needs of man by being consumed, did not stale with abundance. The Middle Ages built cathedrals and sang dirges.’ (The General Theory, 1936: Bk 3, chap. 10, sect. 6)

Keynes is credited with solving the problem of the Great Depression through his theory of the multiplier effect of demand stimulation policies, although others have argued that in reality it was the switch to a wartime economy that put the capitalist economy back on an even keel. This was effectively a strategy of making enormously big holes across Europe and then spending around another decade gradually filling them in; this is obviously to make no comment on the loss of life and livelihood that was the price of this strategy.

Keynes’s argument was for injection of demand by public authorities, but the private sector had already begun its strategy of increasing demand before the stock-market crash and subsequent Depression. Although I should say at the outset that I do not believe that changing the sorts of light-bulb used can save us from ecological catastrophe, it may be that understanding the behaviour of the Phoebus cartel of light-bulb manufacturers just might.

The group was made up of all the leading manufacturers of the day including General Electric, Osram and Philips. At a meeting in Geneva in 1924 the Phoebus group decided to enforce a maximum life-time of the light-bulb at 1000 hours, eschewing the superior design already achieved by Edison around the turn of the century. A long-lasting life-bulb reduced their profits and so innovation was restricted. The oldest light-bulb in the world is still in place and casting light over the Livermore Fire Station in California: it is 110 years old.

The strategy of creating demand through the deliberate design of obsolescent or poorly made goods flourished in the years following the war. It was parodied in a contemporary film by Alexander Mackendrick called The Man in the White Suit. In the film Alex Guinness played Sidney Stratton, a research chemist working in the textile industry. Stratton’s expensive research to discover a miracle fibre that is not subject to the depredations of dirt or wear is successful and uses it to make a luminous white suit. His moment of glory is short-lived, however, since both managers and unions recognise the dangers posed by a suit that does not need to be replaced: Stratton is sacked and pursued both metaphorically and actually by both sides in the age-old capital-labour battle. Eventually he discovers that his suit is vulnerable to sunlight, but he remains undeterred and we leave him in the final scene striding purposefully off to another research laboratory where his attempts to create genuinely sustainable products will be doubtless be greeted with horror.

In the early days of the enthusiasm for creating demand its proponents were quite explicit about the various techniques that they used. King Camp Gillette, inventor of the disposable razor, argued that 'We have the paradox of idle men, only too anxious for work, and idle plants in perfect conditions for production, at the same time that people are starving and frozen. The reasons is overproduction. It seems a bit absurd that when we have overproduced we should go without. One would think that overproduction would warrant a furious holiday and a riot of feasting a display of the superfluous goods lying about. On the contrary, overproduction produces want.'*

We can be cynical about the profit motives of the industrialists, but there was a genuine desire to avoid unemployment and the suffering it caused, and to stimulate demand by any means to make sure there were enough jobs to go around. The strategy worked within its own terms, but it has left us in the disastrous position where efficiency in terms of energy and resources has no place in the modern economy. Now that we recognise the limits to growth we need to unpick this Keynsian solution and rethink the role of aggregate demand as the solution to our economic woes.

*quoted at Slade, G. (2006), Made to Break: Technology and Obsolescence in America (Cambridge, Mass.: Harvard UP),p. 10.


  1. Hi Molly,

    I think it's important to recognise the timescale of our economic woes. The most important thing to do right now is to increase employment and eliminate the suffering and poverty that people are currently experiencing and its ill effects on wider society.

    I cannot see an alternative to Government investment in green industry to solve this problem, and I do not see why this is problematic when we are spending money to lay the foundations of infrastructure needed for a sustainable future.

    Once we have solved that, then we can discuss the long term solutions to destructive capitalism.

  2. I do disagree with Sam.

    Spending money for a sustainable future sounds quite reasonable at the beginning but might open some problems once you think it through.

    To believe that we can make good use of Capitalism builds upon the idea that we are able to control Capitalism. However, Capitalism cannot be controlled! We are doomed to believe that Profit-maximization can solve any of our environmental and even social problems (especially in the long term)!

    Solutions must be based upon Non-Capitalistic alternatives!

    You want to solve unemployment? then make clear that industrial agriculture with all its detrimental impacts on the environment dissapears! Make sure that urban and individual agriculture becomes part of our daily life again (with all its negative as well as positive impacts). So, every person has a limited amount of work to do and can partly make their own living.
    You want to get rid of poverty? then make sure that every person has access to a limited plot of land on which he/she can grow their own food and become partly independent from our addicted-fossil-fuel-society!

    You might not like these ideas at the first moment; maybe because they don't sound futuristic (as does a renewable industrial society) or they imply some labor-intensive work, but to solve unemployment/poverty/unsustainability they are the way forward!


  3. "We can be cynical about the profit motives of the industrialists, but there was a genuine desire to avoid unemployment and the suffering it caused, and to stimulate demand by any means to make sure there were enough jobs to go around."

    I think the desire is genuine only to the point that the goals of said industrialists are met, as long as there is an insulating division between "us and them", the proles are just numbers, to be harvested, sent to war, buzzed by drone aircraft, tracked by cookies. There is no built-in incentive for mass industry to be governed by its own guffaws (PR vs. media exposé notwithstanding) - unless you somehow include the long term costs (to society as a whole) of every product, package & service in the face value. Efficiency is meaningless if you produce a Bhopal. Unless it is the efficiency of profits for a few vs. expendability for the poor turtles on the bottom.

  4. The many deride,the few decide.For some years now,I have thought that if a modest portion of the time spent uselessly attacking,etc.,etc.,and uselessly offering nostrums which are never going to be implemented,were to be spent working out and understanding how it works,and doing what comes naturally once you understand,then things would move forwards easily.Think of the books that were written pre-Rachel Carson.Enough over the last two hundred years,and ten times over,to make everybody as wise as can be about everything necessary to make Earth a paradise garden.The last thirty years the flood of such useful books has turned into an avalanche.More people are getting worried,more books written,blogs are multiplying exponentially.Everybody is reading,writing and talking about the environment(and human rights,equality,etc.,etc.).A veritable tzunami of words.Schemes to save the environment,the climate,humanity,the Earth and to give women all they want...In the meantime,energy and other natural resource use goes up every year.I feel strongly that the flurry of creative activity in response to the growing panic in the West is not going to change anything until it is too late,for the West.It would take a book to explain,but all the books have been written.The people who are panicking are really asleep.They should read some books about human nature and society.Understand what makes us tick.This Green/climate change carry-on is related to the end of empire in the West.If you look at the rest of the world's population,they have other concerns.Well,if the panic in the West turns out to be justified,maybe ten percent of the world's population will survive.But few in the West believe they can do anything at all,except jump up and down and tell politicians what they ought to do.A perfect waste of time.Politicians pay lip-service,and carry on regardless.Study human nature and the psychology of society,I'd say.(Jacob Jonker).