The static world of Richard Murphy

And – most important – although household growth is modest at best whilst trade growth is negligible and businesses biggest customer is slashing spending – especially on investment which it always buys from the private sector – business is going to be investing enormously.

It’s just not going to happen. What it it going to be spending on? And why should it spend? What’s the rationale for doing so without any government stimulus for doing so?

The problem with this view is that it is assuming technological stasis. That business investment is only driven by the level of aggregate demand in an economy.

Something which we know is simply not true: this odd mixture of markets and capitalism is, as we\’ve found to our long term good fortune, actually the great innovation machine, the greatest we\’ve as yet been able to devise.

Part of my work over the past week has been to go and knock on some City doors. \”Oi, mate, wanna buy an idea?\” sort of stuff.

Project one is to prove the technology to clear up a billion tonnes odd of pollution while extracting the stuff to make fuel cells work. Project two is simpler and cheaper: a new method of separating the lanthanides. Something which would make, assuming success of course, each 1MW of windmill installed about $3,000 cheaper.

No, these aren\’t in fact huge worldchanging projects. Rather to my surprise though it looks like we can get both ideas funded (and a big shout out to those several readers of this blog who passed along contacts to get me in front of those City guys).

Which brings me to the real point. Knowledge of these sorts of things is local: they aren\’t the sort of things which would occur to a retired accountant from Wandsworth. Which is why said retired accountant is sitting in Norfolk puzzling over what business might invest in. We\’re going to go off and spend money on making his beloved Green New Deal a reality: which is why we use markets to allocate capital rather than retired accountants from Wandsworth actually.

9 comments on “The static world of Richard Murphy

  1. Sad mentality really.

    I spend my day trying to find opportunities for business. My incentive is not to go bust, take out some money myself, go on and create somthing else, in that order. I like to do it with something I don’t feel ashamed of, and what I don’t do is sit around on my fat arse waiting for the govt. to ‘stimulate’ me. A lovely consequence is that I create jobs. It’s not my main motive at all but still has a feel good factor to it.

    I might do it through one of my current companies, I might pull in friends to set up another company. Whatever fits. Might even convince somebody else to do it if I can’t.

    One of the problems we have is that guys like your best friend in Norfolk just do not know what an entrepreneur/innovator/businessperson/wealth creator really is or does.

    Of course, all the govt. expenditure comes out of the taxes on the wealth created. Not creating wealth? Then we have a problem.

    Wealth is not a fixed pie to be shared, but is infinitely capable of growing or being grown. Can’t see the TUC (or CCOO and UGT in Spain) doing anything to create wealth. Good at ‘sharing’ it and destroying though…

  2. Well, leave an example within your field of expertise.
    don’t be rude or personal, just tell him why your industry (whaterever one you are in) is likely to be increasing its investment over the coming parliament.
    Because he cannot imagine an investment, he cannot imagine that others could imagine an investment either.
    I have left him 3 example from my industry. Nice simple examples mind you…

  3. “the greatest we’ve as yet been able to devise.” Hayek would probably have argued with “devise”: too close to “design”.

  4. The problem is that technological stasis is what our government is aiming for, thopugh so far even the EU have not been entirely successful at banning progress. Note, for example, that Chinese electricity production (traditionally closely linked to GNP) has been growing at 15% annually while ours has been declining & their 10% growth & our recession is easily explainable. Whatever the Tories may claim they appear no less enthusiastic over this sort of government parasitism than Labour.

  5. ote, for example, that Chinese electricity production (traditionally closely linked to GNP) has been growing at 15% annually while ours has been declining

    This is a surprise, I’ve just been looking at the figures and electricity consumption has been growing nearly everywhere in Europe, with the exceptions this year of Greece, Ireland and Bulgaria (duh) and the UK (huh?), and the UK has seen strong growth in gas demand (my theory – everyone blew their energy budgets on gas for heating.

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