George Monbiot\’s after capitalism

In this little video George says something very strange indeed.

That the economy is limited by the real value of assets in the physical world.

Which is a very strange indeed thing to say about any possible world after capitalism. For it\’s actually the definition of the world before this strange capitalist/free market mix that we have.

It pretty much was true of the Malthusian world, that wealth only increased as physical resources grew. The huge change that the capitalist/market mix brought, that industrial revolution if you like, is that wealth escaped from that limitation.

The communist economies were still bound by it. That lovely example that Paul Krugman uses. That the Soviet economies had, by some estimates, absolutely no increase in total factor productivity. All growth came from using more resources (including more and better educated labour). And as Bob Solow has pointed out 80% of the market economies\’ growth over that same 20th century came from tfp growth, only 20% from greater resource use.

That is, that the very system he wants us to get beyond, capitalism/markets, is the very system that has freed us from his constraint, that wealth depends purely upon real world physical assets.

And changes in tfp are exactly the measure by which wealth creation is disconnected from those real world physical resources. Which leads us to, if you\’re concerned about the availability of such real world resources, why on Earth would you want to abandon the only economic system we\’ve ever had which divorces wealth from their availability?

7 thoughts on “George Monbiot\’s after capitalism”

  1. I think you could interpret his point rather differently and more generously. The real value of assets in the physical world will rise as their productivity increases. This has a rather different implication from ‘wealth depends purely upon real world physical assets’, which is your formulation not George’s.

    We could still quibble about purely intellectual productivity, ie: of thinking – but in practice this seems also to depend on advances that make use of physical assets.

  2. George earns his money by writing, which involves the usage of a minuscule amount of real physical assets, with the value created by George’s writing ability. His own profession is the most extreme example that refutes his argument.

  3. @Serf

    As I suggested above, the ability to earn (ie: to create economic value) from writing depends very much on physical processes (printing, IT, etc).

    And to the extent that it isn’t due to physical processes, can we reasonably expect increases in pure writing productivity? Are current writers intrinsically more productive than those of 100 years ago? There may be more writing and more reading going on, but this is likely to have come about as a consequence of more efficient physical production allowing more time/energy for such pursuits.

  4. <blockquotethe very system he wants us to get beyond, capitalism/markets, is the very system that has freed us from his constraint, that wealth depends purely upon real world physical asset

    We have a mixed economy. It’s pretty much impossible to disaggregate the capitalist/market element from the socialist elements in terms of which has had the beneficial effects you refere to.

    The notion that social education, social healthcare, social security and social funding of primary research for example have not played a key role in our success is, to me, ridiculous. If you really believe they have played not part in the success, you should advance an argument to that effect; but as I say, they aint gonna be easy to disaggregate.

    To just airbrush out half of our economic structure in your comment above is utterly preposterous.

  5. Timbo, try “I just ran two million regressions” by Sala-I-Martin. It’s empirical evidence on the determinants of growth. Hint: none of the things you identified shows up. So I’m afraid your position is the ridiculous one.

  6. Timbo, so are you claiming that the various “socialist states” not have any of those things like education, health, social services ?

    Because, sad to say they did, and of an egalitarian type so beloved by the socialists. And it would appear that their provision did not seem to add anything to their productivity.

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