Blimey

Even if we restrict ourselves to purely economic progress, still there is little evidence that the market is the thing. Economists know this but do not always say it. Prosperity roughly equals productivity and increasing productivity is the ability to do things faster. The thing that helps us do that is replacing human power (or horse power) with machine power which requires machines, and machines come from advances in science and technology.

During this economic golden age between 1945 and 1975, GDP per capita in the UK grew at an astonishing 2.7% per annum. But this rate could not be sustained and we are now back on the 1.4% trend dating back to the time of Robert Stephenson.

Now you could argue that technology needs free markets to flourish but the evidence is not there for this. In fact between 1920 and 1980 GDP per capita rose much faster in the `non-free’ Soviet Union (by a factor of 12) than in the `free’ USA (a factor of 3.4), albeit the Soviet Union started from a much lower base.

Actually, this has been tested. The Soviet Union managed no increase in total factor productivity over its 70 years. The US however…..

45 comments on “Blimey

  1. “Now you could argue that technology needs free markets to flourish but the evidence is not there for this. In fact between 1920 and 1980 GDP per capita rose much faster in the `non-free’ Soviet Union (by a factor of 12) than in the `free’ USA (a factor of 3.4), *albeit the Soviet Union started from a much lower base.*”

    And that last sentence explains everything in the paragraph.

    Also- which figures are they using for the soviet GDP? The accurate ones, or the since proven to be bollocks Soviet ones?

  2. “Not my field, but may I suggest that we could make a good start by ramping up on sustainable technologies that could both address climate change and lower energy costs….”

    I hope Charles is going to be ok when he finds out that those soviet growth rates were in a large part achieved by chopping down more trees, sweating the workers for longer hours and burning more coal?

  3. John Square beat me to it.

    The same thing happened in China. Yes, they have had an amazing growth rate (>6%, IIRC), but that’s what happens when you modernise a country whose peasants are grubbing in the dirt with sticks.

  4. Does anyone have the source on Tim’s Soviet Union claim about total factor productivity? It’s in a Krugman paper, I recall.

    Thanks!

  5. Even if the figures for the Soviet union were true, don’t forget that millions starved to death to get them.

  6. Starving a chunk of the populaton to death, liquidating political revanchists and the Great Patriotic War will have done something to per capita figures too.

  7. Were Tu-95s in the Soviet GDP numbers?

    The Soviet economy was mobilized for production of arms. Higher GDP numbers were of no value to its citizens.

    ‘Prosperity roughly equals productivity’

    Depends on what you are making.

    To wit: England could make Avro Lancasters much more efficiently today. Productivity gains?
    Sure, but so what?

  8. I like the way he puts the advances of the 19th century down to the invention of the steam railway, missing that it was entirely driven by capitalist market mechanisms. George Stephenson wasn’t paid by the state. The Liverpool and Manchester railway was paid for by Manchester industrialists to break the canal monopoly so they could earn higher profits. If it wasn’t markets it was greed. Yet his isn’t lauding that.

    Likewise the car and electricity. All inventions by inventors motivated by a desire to make money and spread by entrepreneurs keen to make money.

  9. Russia went from being an exporter of grain to an importer under Soviet rule. It’s back to being an exporter.
    NB I said “Russia” not the Ukraine. In the 50s and 60s Russia’s deficit frequentlyexceeded the Ukraine’s exportable surplus and they had to import wheat from Australia.
    That is a simple fact to puncture the claims of Soviet gains in productivity – they could not feed their population.

  10. Even better is that looking at his source graph from “The Atlantic” he is says USSR GDP grew by a factor of 12 from 1920 to 1980 while USA only 3.4. Not only doe I make it closer to factor of 11 (11.18 I would round to 11 not 12) but for some reason he doesn’t start at the beginning of the dataset (1917) which would only give him a factor increase of 6 or go all the way to 1990 (Which would increase the US figure to 4.2 while making little improvement on the UUSR one). Its like in cherry picking dates he trying to avoid bad economic things related to Communism.

    https://d3ly393cqi31mg.cloudfront.net/P4eRt/1/#embed

    https://www.theatlantic.com/international/archive/2016/03/bernie-sanders-democratic-socialism/471630/

  11. decine

    Elon Musk is looking to make a mint out of electric cars, either from consumers of government subsidies.

  12. “Prosperity roughly equals productivity and increasing productivity is the ability to do things faster. The thing that helps us do that is replacing human power (or horse power) with machine power which requires machines, and machines come from advances in science and technology”

    FFS this is bollox. Growth is the accumulation of labour and capital and technology. Capital includes using machines and horses. Technology does not necessarily mean machines – it just means better ways to do things with a combination of labour and capital. Thus three crop rotation is a technology, just as TQM or Kanban are “technologies”.

  13. Have you seen this? Oh Joy (of Tax), just in time for Christmas, more great thoughts from the man, knocked up at a folding table high over the Atlantic:

    Richard Murphy says:

    October 2 2017 at 8:41 am

    Have you read The Courageous State?

    Should I revisit it?

    G Hewitt says:

    October 1 2017 at 9:09 pm

    If not you, who, if not now, when?

    Richard Murphy says:

    October 1 2017 at 10:24 pm

    I know, I know….

    Going to the States in just over a week

    I’ll write it on the plane

  14. ‘All inventions by inventors motivated by a desire to make money and spread by entrepreneurs keen to make money.’

    The telephone switching system was invented by a mortician.

    A competitor’s wife was a switchboard operator at the telephone exchange. When callers asked about mortuaries, she directed them to her husband’s business.

    Automation was deemed the way to eliminate his loss of business – in a field not his own. He eliminated at least a million jobs!

  15. Going to the States in just over a week

    Anyone got contacts in the DHS? Plenty of room in Gitmo,now!

  16. @ Ironman
    Don’t ask that!
    Robert Stephenson was British and a Railway engineer in that he invented a Railway engine. So he was a British railway engineer – some leftie is going to misquote that as a British Rail engineer.

  17. Going to the States in just over a week

    A warrior for Gaia making a long distance plane journey? What about the children?

  18. @John77 said
    That is a simple fact to puncture the claims of Soviet gains in productivity – they could not feed their population.

    You need to be careful here. We don’t feed our own population, but that’s through choice, not because we can’t. Tim often explains that importing food is a good thing. I could imagine some lefite claiming the Soviet Union made the same choice.

  19. The Soviets could have fed those Ukranians, they simply chose not to for political reasons. Three cheers for socialism, I guess.

  20. I rather thought that the whole reason we won the Cold War was that we the west was creating wealth whilst the USSR and all the other socialist communist places were eating it to create weaponary. I heard that USSR defence was costing upwards of 40% of their gdp.

    In any event by simple observation you can see that from 1917 onwards the USSR was simply consuming capital.

  21. Oh, Dick! Remember the sailors.

    Go back in time and teleport to Russia.

    Your jabbering would have made you a useful idiot during the revolution but a few years later they would have shot you as a traitor to the cause.

    In your case, they might not have waited that long…

  22. The Warsaw Pact was creating wealth at such an unprecedented rate that they had to build a wall to stop people fleeing from it, and machine gun them when they tried.

  23. @Gamecock, October 2, 2017 at 2:25 pm

    Strowger.

    UK GPO / BT were still using them when BT were privatised. Post privatisation BT spent £ billions rapidly replacing them with System X and Y digital (DMTF) exchanges.

  24. @ Ian Reid
    As a result of the Industrial Revolution England’s (and Glasgow’s) population expanded so fast that England and the Scottish Lowlands became the most densely populated areas on earth after Vatican City and we exported goods while importing food. England’s population quadrupled (Glasgow’s grew more than tenfold): the USSR did not have a comparable population explosion.
    I suspect that net grain production (after losses due to rats and rot) in Ukraine and European Russia may actually have declined during Soviet rule. Kruschev’s Virgin Land campaign added millions of acres to Russia’s food-growing areas but that was insufficient to ensure that the proletariat could have enough bread to eat.

  25. I heard that USSR defence was costing upwards of 40% of their gdp.

    But only because their GDP was so low. They weren’t spending much more, in real terms, than the West.

    Also “defence” spending in such a country tends to include things we do not consider defence, such as Border Guards/Customs and prisons.

  26. ‘Strowger, an undertaker, was motivated to invent an automatic telephone exchange after having difficulties with the local telephone operators, one of whom was the wife of a competitor.’ – Wikipedia

  27. What lies dies Snippa have to say to get through US Immigration? I remember them asking why I was visiting and if I knew anyone. If Snippa gave truthful answers, he would be turned back

  28. Pcar’s,

    It wasn’t that they were still using them, it was that they’d got to the point that there weren’t any spares and they’d had to stop regular maintenance because it caused more problems than it fixed.

    Crossbar exchanges were only slightly better, having a bit of capacity and some spares.

    BT wasn’t privatised for ideological reasons it was for economic ones. I remember Keith Joseph (pbuh) telling a story of how they were in a meeting wondering how to find the money to upgrade the exchanges when some young advisor reminded them about privatisation.

  29. The Soviets were bankrupting themselves paying for weaponry while the US was barely breaking a sweat. The difference in the sizes of the two economies meant that a US spending uptick of, say, 0.1% would mean the USSR needing to find resources it simply didn’t have to try to match it. By the time it all went tits up at the end of the 80s, NATO gear was so much better than Warsaw Pact equipment that if they’d invaded it would probably have been a rout. Their first echelon forces would have been so ravaged that they would have probably gone to tac nukes just to hold ground within 24 hours of an invasion. The commies played the same war games we did and they knew this. The West managed to have enormous piles of top quality guns and butter, while in the armouries and shops of the Soviet Union the shelves were either bare or covered in useless shit.

  30. Great a favourable reference to Keith Joseph who gave up on economics and suggested a fascist solution to the problem of full employment: eliminate that class of British people who did not have the private means to provide their own housing, private education and private health care.Effectively the majority of the population.The autistic Thatcher ,ultimate beneficiary of his Milk Street conspiracy against Heath,subsequently went long term on the homeownership part of the programme and inflated house prices till she had majority support but this then wrecked the free market economy, permanently it would appear.

  31. “Prosperity roughly equals productivity and increasing productivity is the ability to do things faster. The thing that helps us do that is replacing human power (or horse power) with machine power which requires machines, and machines come from advances in science and technology.”

    Has he ever sat in on, say, a first year macro course that looks at the Solow growth model, Total Factor Productivity etc? He writes as if he has masterfully assessed a big pile of evidence on this issue to reach his conclusions (or at least, he came across a big pile of evidence that supports his preconceived conclusions) yet he can’t get right basic details that would have come from reading an introductory textbook. If he hasn’t read an introductory book on the subject then why is he writing his own books and why is he claiming to have made a thorough assessment of an evidence base without doing circa 50 pages of introductory reading first?

  32. @Bloke in North Dorset, October 2, 2017 at 11:57 pm

    BT wasn’t privatised for ideological reasons it was for economic ones.

    Exactly. State is incompetent at running a business as only consumers suffer when errors occur.

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