Matias Vernengo, “The Second Industrial Divide and the Third Industrial Revolution,” Naked Keynesianism, May 16, 2013.More interesting are the implications of large-scale industrial use of 3-D printing, or more likely a future form of it.
Current 3-D printing is an early form of nanotechnology. Back in the 1990s, “nanotechnology” was a buzzword that one kept hearing in speculations on future technology, and probably a lot people became skeptical that a “nanotech revolution” or anything like it was anything but a pipe dream, and only something realisable in the distant future.
But now one gets the sense that things are moving much faster than many people thought. 3-D printing and the ongoing technological advances in automation and robotics suggest that the world may experience a new or “Third Industrial Revolution” in the medium and long term future. I say the “medium and long term future”, because we are only just seeing the early signs of it now, and no doubt the progeny of these current technologies will make current 3-D printing look pretty primitive.
Moreover, these developments are another reason why re-shoring and the return of manufacturing to Western nations might happen (although as Vernengo points, the US still has a pretty impressive industrial sector). Of course, I do not think it will necessarily happen if left to market forces. What is called for is a kind of activist industrial policy and, above all, demand management and full employment policies to both accelerate it and take advantage of the growth opportunities opened up by new technologies.
We may see strong deflationary forces in the 21st century, in the sense that there will be steep price declines in the costs of manufacturing, certainly once human labour is reduced, productivity growth soars, and a few decades of innovation and price declines occur in these new capital goods themselves using all the technologies above.
Most probably, the great deflation of the late 19th century from 1873 to 1896 had just as much to do with productivity growth from new technologies and the opening up of production in the Americas and Australia as it did with poor money supply growth rates caused by a relatively inelastic monetary base in many nations.
But with fiat money and fully endogenous money supplies now we may avoid harmful deflation that induces debt deflationary forces, which were very probably a major economic problem from 1873 to 1896.
I have my own thoughts on 3D printing, and I highly doubt it will be all that revolutionary.ReplyDelete
"I do not think [reshoring] will necessarily happen if left to market forces."ReplyDelete
The market will do a better job than industrial policy in determining the proper balance between reshored production and off-shore production (considering transportation costs and endowments of factors of production).
And what do you have against poor countries such as Vietnam gaining experience making products for Intel and Canon? Don't you want to give them the chance to raise their standard of living?
Capitalism doesn't raise standards of living. Our standard of living is only as good as it is due to 1) a very bloody labor history where workers fought for better conditions, causing the capitalist class to give them handouts in order to de-radicalize them and 2) the exploitation of the third world. There is no way possible for every country on the planet to have the same standard of living as the "first world" - at least, not under capitalism.Delete
"Capitalism doesn't raise standards of living."Delete
Even LK doesn't believe this. The era he likes best is the post-war Western economy until the 70s--the "golden age of capitalism." (never mind that is was grim in communist Europe and a horror show in China).
Our standard of living is only as good as it is due to 1) a very bloody labor history where workers fought for better conditions, causing the capitalist class to give them handouts in order to de-radicalize them
So the income growth in the last 20 years in the Eastern bloc and China is purely due to organized labor and has nothing to do with the (varying degrees of) adoption of capitalism?
And if workers in Vietnam or other poor countries want to form unions, by all means, they should do so. But w/o foreign investment, there won't be any profits to share at all (and a reputation for strikes won't help attract FDI).
"2) the exploitation of the third world."
Yes and no. Yes, Europeans stole the entire Western hemisphere and most of Oceania. Are you prepared to give it back? Some might be, but the vast majority are not.
But as far as economic growth goes, science, technology, literacy, finance, and improved management techniques fueled the industrial revolution (and subsequent living standard improvement), not imperialism, which was a net drag on Europe.
There is no way possible for every country on the planet to have the same standard of living as the "first world" - at least, not under capitalism.
I never said there was, only that FDI-led industrialization gives poor countries a chance to live better than they do now. Btw, Paul Krugman agrees:
But I'll hear you out: what's your plan to equalize incomes everywhere in the world?
(1) "The era he likes best is the post-war Western economy until the 70s--the "golden age of capitalism." (never mind that [it?] was grim in communist Europe and a horror show in China"
John S, Keynesian economics is not responsible for the horrors of communism. Your insinuation here is wrong and doesn't do you any credit.
(2) "So the income growth in the last 20 years in the Eastern bloc and China is purely due to organized labor
I doubt whether Julia Riber Pitt@May 18, 2013 at 3:27 AM implied this. You're inventing straw man arguments.
Yes, economic growth in China was not caused by labour unions, but by liberalised economic policies such as trade and FDI, but still with a high degree of economic intervention and industrial policy, just as happened in South Korea, Japan, Taiwan.
(3) Julia Riber Pitt@May 18, 2013 at 3:27 AM:
"There is no way possible for every country on the planet to have the same standard of living as the "first world" - at least, not under capitalism."
It depends on what type of capitalism we want to talk about.
For the record, I don't think all types of capitalism are bad. An extreme laissez faire system or the current neoliberal one is, but post-WWII capitalism in, say, the Scandinavian model was probably about the most humane and successful economic system ever seen. One could even improve on it.
In fact, I think a thoroughly redesigned capitalism that totally reformed the World Bank or IMF -- so that these institutions provided development loans or subsidies and foreign exchange reserves to the third world when necessary -- would go a long way towards reducing poverty.
John S@May 18, 2013 at 5:17 AM:Delete
"But I'll hear you out: what's your plan to equalize incomes everywhere in the world?"
See the end of my comment above.
E.g., a number of the really serious health issues in developing nations can be fixed with a small fraction of first world GDP.
"There is no way possible for every country on the planet to have the same standard of living as the "first world" - at least, not under capitalism."Delete
This is just wrong. This comes back to the idea -- which is propaganda spread by certain Malthusian groups in the environment movement -- that the world economy cannot grow indefinitely.
This is so untrue its not even funny. When we talk about growth -- whether in the West or in the old Soviet Union -- we're talking about income or GDP growth. Now, GDP/income grows not matter what this income goes towards.
So, if a company makes money by dumping toxic waste in a river this is GDP/income growth. But if someone goes and cleans this same river and gets paid by the government to do it this is just as much GDP/income growth.
"Growth" is a neutral term. It all depends on what growth we want. If you take sustainability issues seriously all you need do is recognise is that there should be increased investment in green projects. That's all. If this takes place we can "grow" for as long as we want. No need for Malthus' specter here -- even though dodgy people in the environmentalist movement pretend that this is not the case and this leads them to obscene and downright dangerous conclusions.
Keynesian economics is not responsible for the horrors of communism. Your insinuation here is wrong and doesn't do you any credit.Delete
I certainly was not implying that Keynesian economics caused communism. By "it" (mis-typed as "is" in the parenthetical comment), I was referring to the period from 1945-70s, not Keynesian econ.
The point I wanted to make is that, despite your persistent criticisms of the neoliberal age starting in the 1980s, this period has coincided with great improvements in living standards in much of the developing world. Whatever flavor of capitalism one prefers--state-led, Keynesian, Neoliberalist, or Austrian laissez-faire--the key point that Marxists like Julia must (but will likely never) acknowledge is that any form of capitalism trumps communism.
Apologies for the misunderstanding, my comment should have been worded more clearly.
Note: Just to avoid further misunderstanding, I do not endorse the crony capitalism that had masqueraded under the label of "neoliberalism." I support libertarianism and free markets, not corporatism and too-big-to-fail finance.Delete
"The point I wanted to make is that, despite your persistent criticisms of the neoliberal age starting in the 1980s, this period has coincided with great improvements in living standards in much of the developing world"Delete
The 1945-1970s period also coincided with "great improvements in living standards in much of the developing world" in the non-communist nations as well -- and in terms of real output growth in many nations was superior to 1980s-2000s.
In fact, most developing nations did poorly from 1980s onwards.Delete
The exception -- East Asia including Japan, Taiwan, South Korea and China -- are precisely those nations that rejected the strong form of neoliberalism.
And the strong growth period of Japan, Taiwan, South Korea actually belongs to the 1940s-1970s anyway.
I'm not altogether convinced that really existing socialism was the failure people generally think that it was. What happened in the Soviet Union, I think, was that socialism was built during wartime. This led to the institutional privileging of military investment/output over consumption investment/output. That's why the USSR had some of the most sought after military tech in the world (who didn't want an AK47 or a MIG?) but at the same time had shortages of socks and toilet paper. It was basically a permanent war economy.Delete
This implies, to me at least, that planned economies could potentially work. However, I'm not a fan of them for other reasons. But I think that the fall of the USSR had more to do with the dynamic that I'm talking about than it had to do with lack of goods markets etc. After all there was no shortage of war manufactures and these were of exceptional quality. So, the market forces myth doesn't appear to me to hold up.
"...this leads them to obscene and downright dangerous conclusions."Delete
Philip, can you elaborate on this idea or give an example?
Sure. Two words. Population control.
Note the VERY FIRST comment on the piece:Delete
"High population levels, are a threat to our environment and quality of life. Anyone who claims to be pro-environment ought to support efforts to keep population levels down.
But of course, the left can't admit that there is a problem worldwide, as they'll then have to admit that immigration led population growth is a problem in the UK, too."
People think that environmentalism is liberal. I'm not convinced that it is at all.
Ah yes, birth control. But I was thinking about their ideas concerning economic policy. The idea that declines in GDP and deindustrialization (worldwide) are good for the environment, even as it causes suffering for humans. But they would argue this is not necessarily the case, as long is there is enough solidarity. Some of them also argue in favor of planned economies that only produce to satisfy basic needs (food, shelter, health,...) and do away with excessive consumption. I don't know what to think about this. What would happen with our planet if seven billion people would have the same standard of life as the average person in the developed world, without a major breakthrough in the development of environmentally friendly technologies?Delete
Philip Pilkington@May 19, 2013 at 3:28 AMDelete
Good pojnts about the Soviet planning system.
I mean the East Asian miracle in Japan, South Korea and Taiwan is the result not just of trade, but highly successful planning and industrial policy. Just have a look at the history of the Japanese MITI.
Also, the Soviet Union managed to have a pretty impressive space program and think of its promising innovations in tokamak fusion reactors. The fusion reactor history is mentioned here:
"I mean the East Asian miracle in Japan, South Korea and Taiwan is the result not just of trade, but highly successful planning and industrial policy. Just have a look at the history of the Japanese MITI."Delete
Just look at how a man was put on the moon. A very successful command structure.
And, if you think about it, the internal organisation of pretty much every large company you can think of.
Tesco doesn't use market forces internally. It dictates.
"the internal organisation of pretty much every large company you can think of."Delete
You can quit a company. Much harder to quit your country if you don't like the way it's being run.
And state-led planning has scaled back tremendously in Korea and Taiwan. The legacy of state planning in Korea--massive, unprofitable conglomerates (save Samsung) nurtured via decades of cheap directed credit and preserved by an arcane cross-shareholding system--is thoroughly negative, in my view. Ditto for zombie lending (tacit bailouts) in Japan (which I very much doubt takes place w/o any govt encouragement).
Yep, just on general principles I agree with you, Julia. Not so new. They've been used by the military for a while, like on aircraft carriers at sea for long periods. One fabber = 3d printer cuts down on the need for storing and inventorying a zillion teensy parts that might be needed only once a year or longer. Nary a mention in Wikipedia's article, though I remember reading about 'em before 2000 or earlier. Techno-hype goes back to ancient Chinese panegyric over the invention of the wheelbarrow, at least. I'm often wrong, but it's more fun to be a curmudgeon.ReplyDelete
@John S. "I support libertarianism and free markets, not corporatism and too-big-to-fail finance."ReplyDelete
I think libertarianism and free markets lead to corporatism and too-big-to-fail finance. Unless you impose rules and constraints, but then it's not libertarianism and free market anymore. An "unhindered market" (an abstract concept) cannot remain unhindered for long.