▲ 16 points
back
14 comments
The term for this is "cottage industry". The system also existed in England around this time. Essentially it was industrialization, just dispersed and unable to take advantage of the efficiencies of centralization. It ended in Europe due to the rising costs of labor versus increasing automation. But any economy with a large consumer base and low capital investment will naturally develop that way.
Industrialization occurred in Great Britain due to a very specific set of conditions not present in other regions. Coal was already in widespread use before industrialization, which led to extensive coal mining in England.
Heavy use of coal required an advanced horse-drawn transporation network as well as navigable water ways. England alone had the former due to stationary pastoralism.
Heavy use of coal led to the first industrially practical steam engine, the Newcomen engine, which pumped water out of coal mines.
Part of the problem with industrialisation is that humans don't have instincts for it. One of the lessons of the communists vs the fascists vs the capitalists through the 20th century is that none of them had any coherent vision of how to build a prosperous society.
It just turns out that capitalism is the most compatible with liberal values, and if people are left alone they build a prosperous society through emergent behaviours.
You're ignoring the fact that some of the most successful industrialisation stories of the 20th century (going into the 21st) have come from definitely non-liberal countries. I'm talking about the Soviets in the late '20s - early '30s, about South Korea and Taiwan until the 1990s, partially about Japan after WW2 (which was a democracy on paper, but reality on the ground was more complicated) and, of course, about China.
As I understand it, in China people are 'left alone to build a prosperous society through emergent behaviors' provided the State knows what you're up to and you don't get involved in non-State approved political activities. Liberal within limits. Capitalism, the word, is generic and therefore subject to an interpretation which best suits the intent of those who use it. But doesn't its core meaning imply harnessing of the natural talents and inclinations of us all to generate something of value for others whether as a service or as goods? A successful society permits freedom within which this can occur.
The Soviet Union saw expansion of heavy industry at the expense of suppression the progenitors of long-term industrial expansion, which is human capital.
Wages plummetted throughout the 20s to meet the central government's industrial goals:
https://www.marxists.org/history/etol/newspape/ni/vol03/no03...
>At 306 kronen, which are equivalent to 15 gold rubles, the present average Russian wage is about 68% of the average wage of the Russian factory worker under Czarism.
That's not a successful industrialization by my criteria.
Japan was had a very liberal economy post WW2. There is much evidence dispelling the mythologized account of MITI's role in the expansion of the Japanese economy through industrial policy:
https://www.econlib.org/library/Enc1/JapanandtheMythofMITI.h...
The article notes much more foundational properties of the 50s/60s Japanese economy, like a smaller portion of private sector output being taxed to support the public sector, as more likely causes of its growth:
>>"The fact that the tax burden is unusually low by the standards of other developed countries may alone be a significant factor in the explanation of the high rate of private saving and investment in Japan." From 1951 to 1970, while Japan's real GNP was growing at an average of 9 percent per year, total national and local taxes (excluding social security) fell from 22.4 percent of national income to 18.9 percent. This left more money for people to save and invest. Compare Japan's situation with the United States, where the proportion rose from 28.5 percent to 31.3 percent. Interestingly, Japan's two decades of greatest postwar growth were also its decades of lowest taxes. During the seventies, as Japan's taxes rose to 22.8 percent of national income in 1980, real GNP growth declined to only 4.8 percent. Higher taxes weren't the only reason for this deteriorating performance, of course; oil price increases also contributed.
This graph demonstrates that Japan had the lowest levels of social welfare spending as a percentage of GDP among the advanced economies.
https://ourworldindata.org/grapher/social-spending-oecd-long...
As per the Soviets, Stalin had set things straight back in 1931 when he had said that the USSR had 10 years in order to industrialise, because that's when they would get involved in the next big war.
He was correct on that, had it not been for the big inter-war industrialisation push the Soviets couldn't have handled the German offensive in 1941-42. And had the Germans won, which they would have done absent Soviet heavy industry, any talk of Soviet human capital would have become moot as a result of Generalplan Ost getting implemented. Even so, I agree that the big losses suffered by the Soviets during the war were a big drag on their post-WW2 economy and on their society as a whole, it is my belief that the Brezhnev stagnation can partially be attributed to that.
As per Japan, I was thinking more about the political regime when I was mentioning "liberal", or at least that's what I thought the OP had in mind. I know that, on paper, Japan was a liberal democracy post-WW2 (again, from a political pov), but they were a de facto one-party government a good few decades after MacArthur's imposed constitution came into being.
Wages for workers in the Soviet Union declined in the 1920s as well, before the rise of Nazi Germany.
This was due to the Soviet goal of transforming the country from an agrarian society into an industrialized socialist state, which ignored basic economics to devastating effect.
The USSR received a colossal amount of aid from the US during WW2 through Lend-Lease, and following the war, carted off significant amounts of physical and human capital from Eastern Europe, especially East Germany.
And despite all of this, by the 1980s it was clear that the USSR's command and control economy could not keep up with the West's liberal economy, especially as emerging industries like semiconductors were too complex to manage without markets.
They received trucks, which certainly helped, but the tanks and the artillery ammunition were certainly on the Soviets and the Soviets alone.
You win a modern a war on the Russian/Ukrainian steppe with artillery, Napoleon and Hitler and now NATO would tell you the same thing, anything else is nice to have but if you don’t have artillery you’re toast.
Not just trucks, but train locomotives and railcars, planes and food.
I don't think there's enough data to argue that prosperous societies are the end state of capitalism because we still don't know if most economies can survive the demographic transition that industrialization produces.
Maybe low birth rates put the whole world into stagflation. Maybe they don't. Maybe low birth rates lead to a return of imperialism and mass war. It's in the uncertain future.
For the sake of brevity I will continue to use capitalism below when I think possibly you, and certainly the original comment actually meant free markets. They are similar but slightly different.
I disagree. I actually think there is more than enough data to argue that prosperous societies are not the end state of capitalism. The are the middle state of capitalism and the end state is increasing market power abuse caused by the proliferation of oligopolies and monopolies, which leads to stagnation on multiple fronts and societal decline. This makes sense when you realize the core tenet of capitalism is severe restriction on what the group can tell an individual they can and can't do with their capital, labor on with their labor or think about with their intellect. When the system is functioning properly it's basically a self regulating society improving idea machine because if you come up with an idea that people like you sell it in the market and amass more capital, which amplifies the reach of your ideas and labor. That process just keeps repeating as long as you output good ideas. When you output bad ideas that nobody wants you fail to sell it and you lose money on the sunk costs, decreasing the reach of your future ideas.
This amplification has a negative downside in that as you increase one's reach you increase their ability to block other's reach and thus you naturally get monopolies/oligopolies. For a capitalist society to continue to stay in the awesome middle stage it needs government to both mostly stay out of the way and also come in and break up monopolies/oligopolies and government seem to pretty uniformly fail about both of these tasks.
side note: it's unusual in history for low birth rates to lead to a return to imperialism and mass war because war is usually expansionary and needs high birth rates to motivate both the need for expansion and deteriorating conditions at home to drive the support of said expansion. The only example of low birth rates causing expansionary war I can think of is the current ukraine thing and that is really more about decreasing border exposure for russia because their population is shrinking so fast they soon wont' be able to field a force that can defend the multithousand km plains border they would have with NATO if NATO held Ukraine.
Russia's actions today aren't exactly demographic in nature - they're precipitated by the trade balance shifting away from oil exports, which were what maintained post-Soviet state expansion. The pressure to move to an overtly authoritarian, expansionist regime correlates with the state no longer being able to enrich the top level. See [0] - the onset of the oil glut coincides with the Crimean annexation. Annexation in this light is a "last gasp" scapegoating play for the regime, the specific justifications don't matter that much.
Russia has long had a colonial ethno-state element - the vast territory predisposes a federal model, but the best way to secure control over many generations is through blood ties to Moscow. So what's enacted through the war - what makes it a good scapegoat - is a vigorous restatement of the status quo: at least, as planned, they were going to take Kiev in a few days, call "mission accomplished" , and resettle ethnic Russians in the region. The emphasis on civilian targets is a "you aren't valuable, your land is valuable" kind of statement, inherited from the Soviet period, and from the monarchy before that.
What's more interesting to me is that over that same century, at least in the US, we've really softened capitalism with aggressive regulation and redefined liberalism entirely.
We still have many of the basic building blocks of capitalism at least, but when I hear someone describe themselves as liberal it's never in the context of individual rights, freedom of speech, due process, etc. Liberalism today seems to be used as a synonym for progressive these days, and the progress argued for is generally away from the individual and towards the collective.