The paper is interesting to me, because I've been groping around for some time now, trying to understand the interaction of increased productivity with aggregate demand that does not seem to be keeping pace.
I saw this yesterday, but was unable to quickly find the source of the best supporting analysis of which I am aware, J.A.Hobson's Imperialism. Now I have found it :
It is this economic condition of affairs that forms the taproot of Imperialism. If the consuming public in this country raised its standard of consumption to keep pace with every rise of productive powers, there could be no excess of goods or capital clamorous to use Imperialism in order to find markets: foreign trade would indeed exist, but there would be no difficulty in exchanging a small surplus of our manufactures for the food and raw material we annually absorbed, and all the savings that we made could find employment, if we chose, in home industries. There is nothing inherently irrational in such a supposition. Whatever is, or can be, produced, can be consumed, for a claim upon it, as rent, profit, or wages, forms part of the real income of some member of the community, and he can consume it, or else exchange it for some other consumable with some one else who will consume it. With everything that is produced a consuming power is born. If then there are goods which cannot get consumed, or which cannot even get produced because it is evident they cannot get consumed, and if there is a quantity of capital and labour which cannot get full employment because its products cannot get consumed, the only possible explanation of this paradox is the refusal of owners of consuming power to apply that power in effective demand for commodities. But it may be asked, "Why should there be any tendency to over-saving? why should the owners of consuming power withhold a larger quantity for savings than can be serviceably employed?" Another way of putting the same question is this, "Why should not the pressure of present wants keep pace with every possibility of satisfying them?" The answer to these pertinent questions carries us to the broadest issue of the distribution of wealth. If a tendency to distribute income or consuming power according to needs were operative, it is evident that consumption would rise with every rise of producing power, for human needs are illimitable, and there could be no excess of saving. But it is quite otherwise in a state of economic society where distribution has no fixed relation to needs, but is determined by other conditions which assign to some people a consuming power vastly in excess of needs or possible uses, while others are destitute of consuming power enough to satisfy even the full demands of physical efficiency.
There is nothing inherently irrational in such a supposition. Whatever is, or can be, produced, can be consumed, for a claim upon it, as rent, profit, or wages, forms part of the real income of some member of the community, and he can consume it, or else exchange it for some other consumable with some one else who will consume it. With everything that is produced a consuming power is born. If then there are goods which cannot get consumed, or which cannot even get produced because it is evident they cannot get consumed, and if there is a quantity of capital and labour which cannot get full employment because its products cannot get consumed, the only possible explanation of this paradox is the refusal of owners of consuming power to apply that power in effective demand for commodities.
But it may be asked, "Why should there be any tendency to over-saving? why should the owners of consuming power withhold a larger quantity for savings than can be serviceably employed?" Another way of putting the same question is this, "Why should not the pressure of present wants keep pace with every possibility of satisfying them?" The answer to these pertinent questions carries us to the broadest issue of the distribution of wealth. If a tendency to distribute income or consuming power according to needs were operative, it is evident that consumption would rise with every rise of producing power, for human needs are illimitable, and there could be no excess of saving. But it is quite otherwise in a state of economic society where distribution has no fixed relation to needs, but is determined by other conditions which assign to some people a consuming power vastly in excess of needs or possible uses, while others are destitute of consuming power enough to satisfy even the full demands of physical efficiency.
Our present dilemma is not for want of cogent analysis. The date of this work is 1902. Hobson was a regular contributor to the (Br) magazine The Nation. He was a reporter for the Manchester Guardian covering the Boer War, which had a profound effect on his thinking. His major concern for the UK was the issue of the distribution of wealth. He favored a mixed system with some industries being nationalized. He was considered to be somewhere between the Liberals and the Socialists of his day.
The problem of distribution of wealth remains the most fundamental and the process Hobson analyzed under the concept of Imperialism continues, as in Iraq, but has also metastasized into new ways for a tiny elite to extract vast sums from the masses. "Financalization" and "bubbles" are two examples. How do we get people to "wisen-up"? At least with the Vikings, the locals knew they were being raped and pillaged. If sanity be culturally normative, then by the norms of this culture I claim insanity.
As Bruce says elsewhere in this thread: the problem is not technical, it is political. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
the problem is not technical, it is political.
How do we get people to "wisen-up"? At least with the Vikings, the locals knew they were being raped and pillaged.
Mine was the first substantive comment on the diary. Bruce, at least in part, concurred. I remain convinced that the cogency of Hobson's analysis is still valuable. Among other things, he is pragmatic.
One of the problems in the US is to undo the vaccination that almost all US citizens received during the cold war against anything that could be smeared, first as "Atheist-Communist", then as Marxist, then socialist, down to, most comically, as "liberal," remains a potent obstacle to intelligent discourse. As the professor in the one course I took from a sociologist remarked: "The value of Marks is in his analysis. His prescriptions were very tentative." But the conservatives have managed to conflate him with Lenin, as in "Marxist-Leninist." Most unfortunate. If sanity be culturally normative, then by the norms of this culture I claim insanity.
