This article has been reviewed by the following Topic Editor: Cutler Cleveland
Once the potentialities of an invention have been demonstrated, the techniques can be borrowed deliberately and made to serve purposes other than the original one. The effects of these techniques in a new situation may induce changes entirely different from those anticipated by the borrower. The more or less blind process by which England stumbled into the industrial system gave way to purposeful change in the case of Germany and of the United States. But since in both these areas there were conditions differing from those in England, invention of new techniques and organization there was again trial and error. Once the necessary formula for the development of high-energy technology had been discovered in the United States, the Japanese and the Russians set out to follow it. But once more, special conditions in Japan and in Russia gave rise to consequences quite other than those anticipated either by the “capitalists” who introduced new converters to strengthen their own power and position or by the “communists” who did likewise with the thought that they, better than theorists of the West, understood how to make high-energy technology serve to produce Utopia. In all these cases a tremendous number of previously unseen social consequences arose, many of them quite the reverse of what was expected.
The diversion of energy into the creation of high-energy converters involves extensive social change. The cost of this change even in energy terms is a function not only of the physical operations involved; it also relates to the existing technology that can be borrowed, the pre-existing culture, and the intelligence and foresight with which the differences between what was and what must come to be can be discovered and reconciled.
Initially, power converters themselves were somewhat inefficient because they were simply adaptations of previously known devices. It was only a result of wasting great quantities of energy in trial and error that users of the machines overcame inherent defects in mechanical design. Slowly the concept arose that a power tool was a thing in itself, and not a mere imitation of its organic forebear, like the “iron horse” or the “horseless carriage”. The technician discovered ways to redesign converters so that they wasted less of the energy required to build and operate them. More recently, electronic controls have led to the creation of machines that do a lot of their own “thinking” and thus have reduced tremendously the cost of operating them. But such machines in their turn require for their creation, maintenance, and development still further alteration in the ideas, habits, and training of human beings. The limiting factors in this process are thus frequently social and moral rather than physical or technological.
The inertial effect produced in a society consists of the physical accretions which make old ways easy to follow, thus the fact that once a stable situation of the type discussed above is reached, children are “automatically” taught by their parents and neighbors to undertake to do what the socially sanctioned system requires them. The educational bureaucracy is slowly induced to supplement this teaching. In these circumstances, means and ends merge, for children are taught not only to seek socially approved goals but also to seek them in socially approved ways. Then means become ends in themselves, since deviation from the sanctioned means becomes as much a source of discomfort to the individual as would failure to achieve the ends prescribed. Conversely, adherence to the established ways of doing things results in the same measures of social approval as would result from the achievement of prescribed ends.
The process of sanctioning means is not, however, uniform, and there are many means which are considered to be morally neutral insofar as a particular society is concerned. It is in these areas of indifference that new means are most likely to get their start. Here a simple cycle of activity in which the relation of means to ends is clear permits the comparison of the efficiency of one set of converters with that of another. The opportunity is provided to demonstrate how well new means can serve old ends, without the concomitant realization that the change in means will probably involve changes in the ends. Once having entered into competition with the ordained means, an efficient converter may make its way further. Much of the gain must of course be diverted to overcome the reaction which sets in to restore the previous balance and unless a considerable momentum is developed the reaction may accumulate faster than new support, halting the further spread of the new means.
The changes required frequently involve new relations between people in different sites. The new ways may be found to benefit the interacting societies unequally; most of the gains may go to those located in only one site while losses are sustained by people living elsewhere. In such cases, some of those who make the change are induced to make it by values which are not locally regenerated and which depend for their sanction upon “outside” influences. The justification which they locally offer for these changes may be altogether different from the values which are in fact operative. Thus the effort by the United States, in the name of a “free” economy, to put capital by government fiat where it would not go in hope of profit makes no sense at all in terms of the professed objective of defending “capitalism,” since it operates in a manner directly opposite to that system which it is supposed to be sanctioning. To predict the places, rates, and occasions at which energy will be diverted into converters, we must, then, not only discover the “economic” causes and costs of the transformation but deal with all the factors which determine whether or not it will be made. Such factors may be called political, moral, religious, social, economic, technical, or what not.
The need for social unity
There are a few generalizations which may serve as a guide to the discovery of the factors at work to affect the probability of change. To secure a shift from production of consumers’ to production of producers’ goods in a feudal, slave, or other oligarchic system which legitimatizes control in the hands of a few over most of the surplus produced requires only that certain small elites be convinced of the desirability of the shift. Of course subsequent consequences may rob them of the ability to direct the flow of surplus, but then new governing groups must be discovered. On the other hand, where control over surplus is vested by religion, morality, and law in the head of each household, or in political or religious leaders who have in the past distributed it as “free” goods or in the form of the means to make war, diversion of surplus from these channels into high-energy converters is a much more difficult task.
It will also be true that diversion of people from their customary ways will be difficult in proportion to the degree to which their existing culture depends upon tradition, ritual, and supernatural sanctions as compared with rational, secular or pragmatic sanctions.
Who shall consume?
There was in the British system of thought room for disagreement as to the size of the share of consumption goods which could be claimed by the holders of each type of factor in production. Socialists claimed all of the surplus for laborers. Landowners held that overpopulation justified increased rent to the landlord. Capitalists regarded the surplus as their payment for increased productivity. Entrepreneurs said that their efforts as managers, and their assumption of risk justified their claims.
The existence of such disagreements about who in particular had a right to consume what was produced did not belie the proposition that ultimately somebody would be able to enjoy the consumption of all that was produced. Nothing in that system of thought provided justification of the cost of devoting endless energy to the production of converters which would be used endlessly to produce converters. Yet it is clear upon careful examination that in a high-energy system this is a process which must go on. British thought thus failed in a measure to provide a moral basis for much of what had in fact to take place in British society if it was to remain operable.
One could assume from the existing evidence that the factors that led to population growth in England were so powerful that nothing short of reduction to a subsistence economy could stop them. Thus because increased productivity by labor must be reflected in a constant increase in the population, whose bids for the land and tools needed for survival must increase rents and reduce wages to subsistence level, nothing could be done to improve labor’s lot. It was assumed that a similar natural law of competition induced entrepreneurs to invest any saving available. But if, as the theory held, interest supplied the motive for saving, there was no natural law inducing anybody to save when the consequence of competition was investment of savings to the point of zero interest. There was instead continuous evidence of continuous collaboration by businessmen to prevent “overinvestment” or “cutthroat competition.” Parliament and the courts were called upon to prevent such conspiracy in restraint of trade, even as they sought to prevent similar conspiracy on the part of labor. But this meant that political means were having to be used to produce what was supposed to be “natural” behavior, so powerfully motivated that nothing could interfere with it. It thus became clear that man’s economic behavior was not what the theory explaining it would lead us to expect. In fact, justification for the strictures against conspiracy came not from some inherent element of human nature but from the religious and moral precepts found in British culture which held that it was man’s duty to produce all the material wealth it was possible for him to produce. Hence, any conspiracy which reduced the production of goods and thus denied them to the consumer took from him what it was his “right” to have. This is a fact not generally accepted; even so recent a writer as Veblin ascribed increased production to an instinct which drives man to be productive just as the reproductive instinct impels him to perpetuate and increase the species.
Moral and religious factors
Such works as those of Tawney and Weber discuss the significance of the underlying moral and religious system as it relates to economic production. The tremendous part which Protestant ethics played in determining both that “progress” should take place and how it should take place is shown clearly. Their position would make this moral code the cause of the accumulation of converters. For us it would be meaningless to ask which came first, the moral system which engendered conditions necessary for increases in productivity, or the production which led men to propagate a system which would make moral what they were doing. As we have shown, the interrelation between social structure and the flow of energy permits no point to be taken (except arbitrarily for the purpose in hand) as “the beginning.”
Assuming, then the fact that the whole of English culture was more or less involved in the transition, what we want to know is “what facts were most clearly and immediately responsible for the accumulation of converters?” Whatever else we find, it is quite clear that a large part of the accumulation was not the product of abstention. As we have already seen, the accumulation represented in considerable part the gifts of nature from hitherto unexploited continents. Moreover, many of the claims made on the flow of goods in the old country represented the product of land to which title was originally established by military conquest, handed out to the followers of the conqueror in amounts totally unrelated to any previous abstention on their part. Similarly, a substantial share of the goods which were used to motivate shipbuilding came from the seizure of products of America and the Orient. Title to them was secured by the British and the Dutch through military power, which enabled them to compel the Spanish and Portuguese to disgorge their loot, much of which was taken from the “natives.” Many of these goods were either directed straight to consumption by the sea lords or were used by them to induce others to direct food and labor to the production or more ships. It was only after this process had reached the point where continued expansion depended upon the use of the recurring product of the low-energy systems that decisions of the type traditionally cited as the source of capital began to be very important.
The business elite
By this time the power of the trader and the industrialist was so well established that abstention on their part was hardly required to keep the flow going. Thus to locate the source and determine the nature of the choice between using surplus for more converters or using it for more consumption goods we must deal with the values of this small group of businessmen. Weber and Tawney and their followers have placed considerable emphasis upon the religious and moral attitudes which caused businessmen to consider themselves to be the elect of God, bound by their stewardship to efficient production. Veblen, and others, emphasized conspicuous expenditure and conspicuous leisure as aims. In company with others, we must emphasize also the development of power for power’s sake.
Whatever his motive, the businessman depended on having political power sufficient to enable him to continue to force such changes as he thought were required to secure efficient production. To this end he turned over part of the new surplus to the government, which thus was put into position to determine the future course of some of the surplus produced. This could be used for exploration, conquest, subsidy, and legislation leading to further productivity, to conspicuous consumption by the court, or to widespread diffusion in the form of bread and circuses for the multitude. Which course was chosen is a matter to be discovered in the intimate history of the particular court of the period. In addition to the sources cited above, there were other savings not induced by the taking of interest. Men fearful of disaster and crises, aging and death, or necessarily interested in accumulating such funds as dowries for their daughters or land for their sons had to save and, far from expecting interest, frequently would have paid somebody to protect their savings. The factors responsible for the actual accumulation of converters in England were many and varied and hardly to be accounted for by the official theory that interest rates have determined savings and investment.
Rent was also a means of accumulating converters. Justification for control over the income from land was derived from the feudal world or from long usage. Royalties from coal mines, for example, represented a windfall to the landowner and had nothing to do with his prescience, his past frugality, or his performance of social function. Like a good many of today’s windfalls, it might be attributed to luck, but it was more frequently held to be an evidence of God’s intention to reward the elite. Gains from trade were similarly an evidence of “fortune” or of destiny.
During the long reign of sail, then, many of the conditions necessary to further expansion of converters became imbedded in British culture and sanctioned by custom, law, and religious belief. Only a few of these conditions were recognized for what they were by those seeking to understand and explain the British economy. So when their explanation was used as a guide in efforts made elsewhere to accumulate converters, the results were seldom as expected.
Accumulation through exploitation
The typical situation in low-energy society, in which physical goods were produced in a social matrix in which material and nonmaterial means were alike considered to have a meaning beyond their obvious characteristics or their instrumental functions, gave way as trade expanded to one in which goods came to be known only by their ability to perform such instrumental functions. The great expansion of trade made Englishmen dependent upon goods produced all over the empire under conditions totally unknown (and frequently unknowable) to their consumers. In urban areas, the fact that the food consumed was not locally produced broke the intimate association of consumption and production and interfered with the sanction of ritual, magic and religion, which affected the volume and nature of production. These city people were frequently unaware of and unconcerned with the conditions under which food was produced. No change in their value systems was required to make it possible for them to accept food from abroad in preference to that raised in England. They chose to accept cheap food from abroad because the cheap energy of sail delivered it to them at less sacrifice of their own values than was demanded by English farmers seeking to maintain or improve their own position in relation to the urbanites. The production of goods in the city for the market rather than for consumption within a community sharing common values robbed many of the previous norms of production of any functional meaning for the buyer. Thus the rate of exchange considered to be “normal” or the “just price” agreed upon where stable conditions long endured, ceased to be an effective measure of wealth. As we have seen, the use of the ship also forced a change in the concept of the just price for money and in the attitude toward moneylending. The danger of loss of the ship and its cargo made some sort of insurance not only allowable but necessary. Conversely, the enormous gains possible with the use of the ship made their division among a number of owners seem to be more equitable than their concentration in the hands of the ship’s captain or a merchant prince. Thus, while the great bulk of the people of the world continued to consume and produce in a tradition-sanctioned world, on a constant-cost, constant-price basis, a few men in the trading nations, Britain in particular, were permitted and encourage to share the gains of the new energy system.
Although English traders did engage in what Veblen had termed conspicuous expenditure, they also invested tremendous amounts of the new energy in production goods. Consumption itself ceased among them to be the sole measure of status; since abstention from consumption could result in tremendous increases in power, which could in turn be transformed into still more power, that power rather than the ability conspicuously to consume often became the index to status.
The process was accentuated in the British realm by the system of primogeniture and entail. This gave control over all the landed estate of the family to the eldest son. The younger sons, deprived of the opportunity to rival the achievements of their elder brothers, migrated in great numbers to reestablish in the New World a system that often yielded even greater surpluses than that of the ancestral lands. On the enormous expanse of new continents the old system was used to concentrate control over products of tremendous value. The plantation system of the Old South was extremely well adapted for the accumulation of the means to investment even if the social norms prevailing there were to cause that surplus to be largely invested elsewhere. The plantation system never resulted in a high plane of consumption by the slaves and indentured labor who cooperated in production, but it did make possible a high plane of living for the owning class and produced the dominant leaders of the United States for a considerable period.
In England the changes in technology which caused plants to be replaced by coal and falling water as the major source of surplus energy received no immediate recognition. The old patterns justifying control over surplus remained for a long time intact. When resistance to the necessary changes was encountered, and profits in England were diminished as compared with what could be gained in the colonies or other available areas, investment abroad was sanctioned. Religious conversion, cultural enlightenment, technical advance, and profitable enterprise were conceived to be necessarily related one to another. There was in those days no powerful group to contest the right of the investor to take the product of English mines and factories to the ends of the earth if he so wished. England had access to all those areas which could be reached and dominated by the use of sea power. If the value system of one area was resistant, another could be selected. At first, because the British trade was with local nabobs, there was no need to change native low-energy systems much. The still comparatively small output of high-energy converters in England could be disposed of by dealing with a small ruling class. The probing finger of trade sought out the weak spots in all the coastal cultures; situations where surpluses generated in the British Isles might be traded for raw materials, luxuries to satisfy British consumers, or promises to pay. This would satisfy British capitalists whose status and prestige at home could be enhanced by such evidence of their ability to control the flow of energy. As trade increased, however, more changes were required in the countries invaded by trade. The degree to which the trade system became acceptable among the people with whom the British traded did, of course, vary. In large parts of China no extensive break with traditional concepts of the necessary relation between production and consumption has yet occurred. Not much more was accomplished in India or in some parts of Africa. In the Americas and the Commonwealth countries, however, the social system of the native was disorganized and finally destroyed. Over most of North America, Protestant British institutions replaced those of Catholic France and Spain, which seemed less suitable to minister to the new techniques, although there do remain areas in which the older institutions still show their influence.
Comparisons and contrasts
The westward movement in the United States constantly recreated low-energy systems and sometimes produced enclaved regions that reverted to a subsistence economy; however, the low-energy systems established were not able, except in the South, to create a culture sufficiently rooted and stable to prevent the subsequent rise of the new pattern. The continent’s resources in many cases got into the hands of those who were little bound by traditional morality, not moved by considerations of status, community, or family control to preserve the old ways, who felt no spirit of noblesse oblige to look out for those weaker than themselves. This resulted in changes in the old system undertaken in the name of “progress” and justified by the new religion, pragmatism. In rural regions, however, the Puritan spirit helped prevent the rise of any great demand for consumption goods. It provided an ethical system that was an excellent milieu for the accumulation of converters. Where resistance was encountered, the surplus produced was adequate to increase power at an unheard-of rate and at the same time to support politicians, persuade the clergy, endow schools, subsidize the press, and generally weaken the hold of old institutions. It was sufficient also to provide through public services the education, propaganda, and advertising to cause the old ways sanctioned by traditional culture to be supplanted by new ones justified by the production of new goods and services.
The advance was not even, nor was it uniformly successful, and regions vary in the degrees to which urban, secular, and pragmatic sanctions have replaced the traditional ones. All the British dominions in some degree faced similar situations. New Zealand and Australia were required to make few concessions to low-energy systems of either the native or the imported variety, but Canada finds in the descendants of old-regime France many of the same problems as have been presented by the Deep South of the United States.
Germany
Germany, on the other hand, while deliberately copying many of the techniques used in England and the United States to increase physical productivity, developed high-energy technology in an area where ideals and values varied considerably from those found in England. Feudal landlords and the militarists with whom they were allied played a much greater role in determining the rate of diversion of energy into converters and the purposes to which the new surplus would be put. Great emphasis was placed on the power produced rather than on the individual consumption good to be secured. Surpluses from the newly available energy were put into the hands of a ruling class which was not required to share power to the degree that the British aristocracy had been. These surpluses were devoted to the creation of new converters at a rate even higher than in England and, considering the size of the stock of converters and the nature of the natural resources with which they had to work, even higher than in the United States. Such concessions, as were wrung from the ruling classes, took the form more often of free public services than of privately selected consumers’ goods. Increasingly, education became a matter of receiving training in the techniques necessary to carry out socially prescribed duties rather than of learning for self-fulfillment. The values taught in the schools justified the diversion of energy into new converters in terms of collective rather than individual gain. Most important was the diversion of energy into the tools of war. These were twice unsuccessfully gambled in the effort to create a system that would place the resources necessary for German industrialization beyond the reach of British sea power. There never was distributed in Germany the flow of privately owned consumers’ goods which so successfully justified continuous expansion of the high-energy system to the people of the United States. Nevertheless, the system worked in such a manner as to bring Germany to a level of physical productivity far above that of many other areas that subscribed to the “free enterprise” system that is so largely dependent upon increased distribution of consumers’ goods to justify increased production of producers’ goods.
France
The French have not been able to modify their old system sufficiently rapid enough to keep pace with the areas just discussed. Their situation is similar to the other industrialized states of northern Europe. In France, those who currently control much of the surplus being produced have contented themselves with agreements that hold present techniques and present prices more or less sacrosanct. They dispose of such earnings as they control by investment in the more productive areas abroad. French adherence to the international free market preserves this right to French capitalists, who have frequently invested abroad a sizable fraction of the amount that others, such as the American government, were at the same time investing in France to increase the ability and determination to defend “free enterprise” there. The French are neither motivated by the German’s sense of duty nor by the American approval of hard work and high consumption of material goods. They accumulate converters at any considerable rate only under the stress of war or preparation for it; their refusal after the First and Second World Wars to increase their war potential sufficiently to keep their place as a great power portends a diminution of their ability to shape their future.
The slow accumulation of surplus of the small French investor, who seeks to gain through saving the security denied him by the limited size of the family he raises and by the absence of extensive systems of social insurance among the peasants and small businessmen has not provided the energy flow necessary to maintain France’s previous place in the world. Since World War II, there has been a very rapid increase in domestic investment. Low wage earners from Africa and Italy have made it more profitable than the hazardous investment abroad that has accompanied the dissolution of the empires. But the increasing share that goes to big industry is changing patterns of both savings and investment.
Japan
The Japanese rise to power makes the traditional explanation of the accumulation of converters seem even less plausible. Under feudalism, a few great families had gained control over an enormous proportion of the surplus energy produced. Religion, law, and morality if possible, more effectively sanctioned their control than that of the feudal lords of Germany. Confronted with a competing system which proved to be, militarily speaking, more powerful than that which they controlled, they quickly set out to discover the sources of its power. They were not impressed by the official explanation and the traditional structure offered by British theorists; they found the German methods to be more congenial to their own culture. Their success was enormous, but they failed to understand all its roots. They took for granted the world market that the British had built up, in which they could function with almost no payment for the social organization that had made it possible. But after the First World War, the picture changed. The British position of power was much impaired. The United States and the Commonwealth had begun to produce respectable stocks of converters of their own. The resurgence of German industry, unhampered by the burden of debt and other obligations, which was not lifted from the British, was great and rapid. British supremacy over the investment market and over the world market for commodities was shaken. Nationalistic controls, established in the interest of national integrity, as opposed to free trade, now intervened to limit the international market for Japanese products. Furthermore, the Japanese failed to recognize that the surplus, which they controlled at the outset of the revolution, was a consequence of the long-continued policies of limiting the birth rate. As they shifted to high-energy converters, there was great increase in population, much of which located in urban centers. This changed the relationships between parents and the opportunities their children could find elsewhere. Japan’s farmers were totally unable to feed the new population. Japan was competing with other Asiatics for food from abroad and the opportunity to pay for food with cheap exports diminished. So, like Germany, Japan turned its high energy system into a program of expanded military power. As in Germany, this was twice unsuccessfully gambled in the effort to secure a base on which Japan could develop industrialized agriculture.
Since World War II, the United States policy of limiting the expansion of Communism supported a very rapid expansion of industry in Japan, and tremendously increased its dependence on the industrialized agriculture of America and the British Commonwealth. It is quite apparent that the formula offered by those who believed in Free Enterprise as the way to industrialize had little to do with the development of either Japan or Germany.
Marxian theory and Communist practice
We have already shown why it is hard to find, in the official capitalist explanation for the accumulation of converters, any satisfactory account of what actually happened in the West. It is even more difficult when we come to examine the efforts of the U.S.S.R. Basically the official Marxian analysis rests on fallacy. This is it is founded on the labor theory of value. The English chose a logic which supported the moral right of the capitalist to the increases in productivity which accompanied the increased use of surplus energy. The Marxians deny any such moral right to the capitalist or landowner but grant it to labor. Now if, as we insist, converters are a cost involved in the use of high-energy techniques, they represent no consumable goods as such and can no more be claimed for consumption by labor than by capital. Confronted with this fact the Marxians, like the Westerners, rather than repudiate their tradition, have chosen to act on other premises than those they claim to be following.
Marx himself recognized that there must by concentration of control if there was to be industrial advance. He thought his projected revolution would take place in an already industrialized state such as Germany. The capitalist would thus make the transition from low to high energy society possible, after which the proletariat would assume dictatorial control and redistribute the wealth the capitalists had “robbed” the worker of. Instead, the Bolshevists seized control in a very “backward” country which had not passed through the capitalist phase. So Marx’s grand design was never followed.
The Bolshevists recognized fairly early the gains to be derived from high-energy technology. The communism of their first efforts, which distributed widely the land, durable consumers’ goods, and control over what little stock of high-energy converters existed, soon showed itself to be a system which would rapidly regress toward a low-energy village community and family-dominated economic pattern. Like the French before them, the Russian peasants, once in control of the land, became very conservative. As a result, the movement toward further progress in the direction of Bolshevist goals came to depend almost entirely upon industrial workers of the cities. They rather quickly discovered that in the absence of a workable industrial system that could quickly deliver consumers’ goods they were likely to be starved by the peasants. In consequence, a whole series of measures to deny to both peasants and workers control over the surplus energy they produced was reestablished. All available goods which could be used in exchange for converters from the West were taken ruthlessly from whoever controlled them and sold abroad. Population not needed on the farms or in the cities was gathered into pools and often worked to death to build the dams, canals, roads, railroads, and buildings necessary to supplement these converters. To rationalize the failure to distribute immediately the products of the stock of converters so acquired, the myth of “the workers’ state” was propagated. The old IWW used to proclaim that the purpose of the church was to teach the workers “You’ll get pie, in the sky, when you die,” whereas the capitalists eat pie today. Marx called religion “the opium of the people.” In both cases the argument was that religious means can induce men to surrender that which they have produced and therefore have a “right” to consume. The succession of Five-Year Plans was supposed to reduce the interval between performance and Utopia, but it was designed along exactly the same lines that Marxians always claimed represented a despicable effort on the part of capitalists to rob workers of their just due.
Acting under the myth that theirs is a workers’ state, and within the semi-Asiatic culture of the area dominated by the U.S.S.R., Soviet leaders have in large part turned the new surpluses available to the production of converters and the durable structures required to make them work. The productivity of some of their basic industries approaches that of many areas in the West, but the worker as consumer finds only slight increase in his consumable income. From this, he can save little and what he does save is recirculated through the productive system. Like the German worker under the Nazis, he receives what gains he does get largely in the form of collective services such as housing, health and education. He cannot choose to spend much of this small income on goods and services that reduce his capacity to produce, like alcohol, nor can he compel available energy to be devoted to the production of goods the technical experts think will contribute less to future productivity than those they propose. The Russian system of accumulation, then, depends hardly at all upon the free choice of consumers to save and invest. On the other hand, the insistence upon the ruthless use of power to increase the stock of converters makes their system resemble in many ways that which many capitalists label as “progress”, for it does make the accumulation of “capital” the primary aim of public policy.
The culture of the Russians to a very great degree is a product not of high-energy but of low-energy experience. Much of what is now being done there could once have been done but no longer can be done in other areas which are now industrialized. In these areas the consequences of industrialization were such that it was impossible, once the critical point in increasing the stock of converters was reached, to continue the processes by which this point was reached. Thus, it is possible that some of the inevitable consequences of the use of high-energy converters will force a change in the Russian system if it succeeds in attaining (if it has not already done so) and retaining the necessary ratio of population to available energy.
Whatever the future may hold for the Russian system and however it may be changed, we must not neglect to analyze the actual process by which the present stock of converters was secured. The first steps toward the accumulation of this stock were, in terms of Communist aims, very successful. The Russians were able to make use cheaply of the enormous gains in technology which the West had achieved only as a result of expensive experiments and costly errors, such as the building of equipment and physical structure that was obsolescent as soon as it was completed, technologically inefficient distribution of population, and the creation of technically “inefficient” values and beliefs. The operations of the Western economic system permitted the Communists to import during the depression in the West a great deal of physical goods at considerably less than their actual cost of production. The Bolsheviks benefited from the liquidation of those in Russia who held durable consumers’ goods which could be traded and from rapid exploitation of the easily secured resources which manpower could deliver. The recurring threat of war made it possible to use the nationalistic values and attitudes developed in the past in “Mother Russia” to call forth heroic efforts toward industrialization to further military preparations. But this situation also diverted surplus energy from the production of converters which could have been used to produce consumers’ goods. Instead it was used to produce planes, tanks, guns, atom bombs, and thermonuclear weapons and the equipment to make them, and which must ultimately either be destroyed in battle or become obsolete. A great deal of it went to produce a very large navy. Thus it is very difficult to make any estimate of Communist success as compared with what might have been accomplished had British and American rather than Marxian and Russian ideas and institutions prevailed. Perhaps, however, a little more historical perspective will show that the actual processes involved in accumulating converters in the U.S.S.R. are not as different from those elsewhere as either capitalist or Marxist purists would hold.
It is not our purpose here to try to evaluate all the consequences of either approach to the problem. Our concern is with the problem as it is to be faced in the future, and the study of the past must deal with the facts of the past regardless of the degree to which they support or contradict the myths that are officially used to explain them. It becomes clearer as we observe the actual relations between saving and investment in the West today that abstention by individuals faced with the choice between consuming and saving has much less to do with what is invested in particular industries than official explanation would hold. In fact it is, as the struggle between Keynesians and anti-Keynesians shows, the disparity between savings and investment that represents one of the crucial problems for Western economic theory.
Modern technology and international disequilibrium
But of far greater import for Western theory is the fact that the very spread of high-energy technology has so upset long-established relations between the peoples of the earth that the whole of the twentieth century has been characterized by war and the preparation for war. The tremendous diversion of energy into the converters needed to carry on mechanized war has led to a paradoxical situation. While continuing to adhere to the official dogma that in pursuit of private profit a society will accumulate converters more rapidly than by any other method, the West, led by the United States, has embarked upon a program in which military need under political direction has greatly supplanted the consumers’ choice in determining the rate of accumulation of converters. The free choice of the consumer in the market place is made subservient to the power of groups to affect public policy and to the choice of the voter in the polling booth. The fear of the spread of communism has resulted in the accumulation of converters at a rate and in forms very different from what they probably would have been in response to the demand of households for consumers’ goods. This is evidenced by the reaction to taxation which reduces the opportunity to buy those consumers’ goods and to rationing systems which control physical production directly. It is not widely believed that a return to private international investment undertaken in competition with domestic demand for goods which require domestic investment would suffice to put resources where they are needed to stop the trend toward communism. So by collective political decision they are put there anyway! But this state-directed system of determining the rate of accumulation and its location is parallel in many respects to the policies actually adopted in communist states. There also the demand for consumption by households is made subservient to the need of the state to fight the inroads of the “enemy.”
Similarly, replacement of individual savings by “Social Security” and “welfare” systems of collective forced savings as a means of dealing with the time preferences of the individual or of anticipating probable future needs at the present time characterizes all the areas of the old British system as well as most of the rest of the West.
The only thing about this control that is new is the degree to which political rather than economic motives govern those who exercise the choice between investing and not investing. The great corporations and the investment bankers were making just such collective judgments long before “government” played any great part in them, and before them the feudal lords and the robber barons did so. In fact, it is quite possible that it was the refusal of such as these to acquiesce in the demand for “goods now” by the consumer rather than any self-denial on their part which gave rise to the stock of converters upon which the defense of consumers’ free choice rests today.
What has been said here has not been an attempt to give a thumbnail history of high-energy society but to cite some of the experiments which have been made, however blindly—and however intermingled by historians with other movements—in the accumulation of the necessary production goods. We have shown something of the modifications of the social system which are required permanently to divert from immediate consumption into production goods, energy adequate for the creation and maintenance of a high-energy system. In summary we may say that high-energy technology requires the diversion of an ever-mounting volume of energy into goods which are not ends but means and requires in justification of such diversion the emergence of a morality to sustain itself. High-energy technology also requires a continuous modification of the habits, training, and occupation of enormous numbers of people: their activities, ceasing to be ends in themselves, require justification in new and different terms. As to the kind of system that best supports and sustains these operations, we have only the very limited evidence provided by the experiments that have so far been undertaken, and there are so many variations in the cases as to make any scientific demonstration of an exact character impossible.
We do know, however, that a morality which delays or obstructs these necessary operations renders a society very vulnerable. For societies which have made the necessary social changes and have accumulated a stock of converters have enormous surpluses which enable them to place limits upon the choices that can be made by those living in low-energy societies. Some of the areas that never have made the transition but do possess natural resources, such as petroleum, now must use a great deal of the income they get from the sale of raw material to buy the arms necessary to protect their control over those resources. So the kind of saving and investment called for by the classical economics has little likelihood of becoming a major source of capital.
Capital formation is a very complicated process in all of the industrialized societies. Careful research has shown that it is dependent upon a great many institutional arrangements and upon value hierarchies shifting in response to many kinds of change. But with rare exceptions, all of these analyses put more emphasis upon monetary and fiscal policies than upon demographic ecological or technological factors. Econometricists depend upon the use of money as a common denominator; they rely upon the forces of supply and demand to make adjustments to, or override the effect of, forces not measured in monetary terms. But there is a mounting wave of resistance to this model in policy making. Demographers, ecologists and engineers are more and more effectively showing the necessity “in the long run” to take into account things that cannot be measured by price but which are basically altering human relationships. Obviously a study which measures only in terms of energy is also inadequate to supply complete answers. But if our thesis is correct, and energydoes set limits on what men can do, analysis in energy terms may reveal some things that price measured analysis cannot deal with. So we will look at production and distribution in the energy context.
Fred Cottrell (Lead Author);Cutler Cleveland (Topic Editor) "Energy and Society: Chapter 10: Adaptations to New Technology". In: Encyclopedia of Earth. Eds. Cutler J. Cleveland (Washington, D.C.: Environmental Information Coalition, National Council for Science and the Environment). [First published in the Encyclopedia of Earth March 4, 2009; Last revised Date March 4, 2009; Retrieved May 26, 2012 <http://www.eoearth.org/article/Energy_and_Society:_Chapter_10:_Adaptations_to_New_Technology>
The Author
William Frederick Cottrell (1903-1979), an American sociologist, developed a general theory of social and economic change based on changes in energy sources and their conversion technologies. In Energy and Society (1955), Cottrell describes the evolution of human culture in terms of energy. He is the first social scientist to identify the importance of the net energy return, or the energy surplus, delivered by a society’s energy system. Cottrell also emphasized the importance of energy transit ... (Full Bio)
Once the potentialities of an invention have been demonstrated, the techniques can be borrowed deliberately and made to serve purposes other than the original one. The effects of these techniques in a new situation may induce changes entirely different from those anticipated by the borrower. The more or less blind process by which England stumbled into the industrial system gave way to purposeful change in the case of Germany and of the United States. But since in both these areas there were conditions differing from those in England, invention of new techniques and organization there was again trial and error. Once the necessary formula for the development of high-energy technology had been discovered in the United States, the Japanese and the Russians set out to follow it. But once more, special conditions in Japan and in Russia gave rise to consequences quite other than those anticipated either by the “capitalists” who introduced new converters to strengthen their own power and position or by the “communists” who did likewise with the thought that they, better than theorists of the West, understood how to make high-energy technology serve to produce Utopia. In all these cases a tremendous number of previously unseen social consequences arose, many of them quite the reverse of what was expected.
The diversion of energy into the creation of high-energy converters involves extensive social change. The cost of this change even in energy terms is a function not only of the physical operations involved; it also relates to the existing technology that can be borrowed, the pre-existing culture, and the intelligence and foresight with which the differences between what was and what must come to be can be discovered and reconciled.
Initially, power converters themselves were somewhat inefficient because they were simply adaptations of previously known devices. It was only a result of wasting great quantities of energy in trial and error that users of the machines overcame inherent defects in mechanical design. Slowly the concept arose that a power tool was a thing in itself, and not a mere imitation of its organic forebear, like the “iron horse” or the “horseless carriage”. The technician discovered ways to redesign converters so that they wasted less of the energy required to build and operate them. More recently, electronic controls have led to the creation of machines that do a lot of their own “thinking” and thus have reduced tremendously the cost of operating them. But such machines in their turn require for their creation, maintenance, and development still further alteration in the ideas, habits, and training of human beings. The limiting factors in this process are thus frequently social and moral rather than physical or technological.
The inertial effect produced in a society consists of the physical accretions which make old ways easy to follow, thus the fact that once a stable situation of the type discussed above is reached, children are “automatically” taught by their parents and neighbors to undertake to do what the socially sanctioned system requires them. The educational bureaucracy is slowly induced to supplement this teaching. In these circumstances, means and ends merge, for children are taught not only to seek socially approved goals but also to seek them in socially approved ways. Then means become ends in themselves, since deviation from the sanctioned means becomes as much a source of discomfort to the individual as would failure to achieve the ends prescribed. Conversely, adherence to the established ways of doing things results in the same measures of social approval as would result from the achievement of prescribed ends.
The process of sanctioning means is not, however, uniform, and there are many means which are considered to be morally neutral insofar as a particular society is concerned. It is in these areas of indifference that new means are most likely to get their start. Here a simple cycle of activity in which the relation of means to ends is clear permits the comparison of the efficiency of one set of converters with that of another. The opportunity is provided to demonstrate how well new means can serve old ends, without the concomitant realization that the change in means will probably involve changes in the ends. Once having entered into competition with the ordained means, an efficient converter may make its way further. Much of the gain must of course be diverted to overcome the reaction which sets in to restore the previous balance and unless a considerable momentum is developed the reaction may accumulate faster than new support, halting the further spread of the new means.
The changes required frequently involve new relations between people in different sites. The new ways may be found to benefit the interacting societies unequally; most of the gains may go to those located in only one site while losses are sustained by people living elsewhere. In such cases, some of those who make the change are induced to make it by values which are not locally regenerated and which depend for their sanction upon “outside” influences. The justification which they locally offer for these changes may be altogether different from the values which are in fact operative. Thus the effort by the United States, in the name of a “free” economy, to put capital by government fiat where it would not go in hope of profit makes no sense at all in terms of the professed objective of defending “capitalism,” since it operates in a manner directly opposite to that system which it is supposed to be sanctioning. To predict the places, rates, and occasions at which energy will be diverted into converters, we must, then, not only discover the “economic” causes and costs of the transformation but deal with all the factors which determine whether or not it will be made. Such factors may be called political, moral, religious, social, economic, technical, or what not.
The need for social unity
There are a few generalizations which may serve as a guide to the discovery of the factors at work to affect the probability of change. To secure a shift from production of consumers’ to production of producers’ goods in a feudal, slave, or other oligarchic system which legitimatizes control in the hands of a few over most of the surplus produced requires only that certain small elites be convinced of the desirability of the shift. Of course subsequent consequences may rob them of the ability to direct the flow of surplus, but then new governing groups must be discovered. On the other hand, where control over surplus is vested by religion, morality, and law in the head of each household, or in political or religious leaders who have in the past distributed it as “free” goods or in the form of the means to make war, diversion of surplus from these channels into high-energy converters is a much more difficult task.
It will also be true that diversion of people from their customary ways will be difficult in proportion to the degree to which their existing culture depends upon tradition, ritual, and supernatural sanctions as compared with rational, secular or pragmatic sanctions.
Who shall consume?
There was in the British system of thought room for disagreement as to the size of the share of consumption goods which could be claimed by the holders of each type of factor in production. Socialists claimed all of the surplus for laborers. Landowners held that overpopulation justified increased rent to the landlord. Capitalists regarded the surplus as their payment for increased productivity. Entrepreneurs said that their efforts as managers, and their assumption of risk justified their claims.
The existence of such disagreements about who in particular had a right to consume what was produced did not belie the proposition that ultimately somebody would be able to enjoy the consumption of all that was produced. Nothing in that system of thought provided justification of the cost of devoting endless energy to the production of converters which would be used endlessly to produce converters. Yet it is clear upon careful examination that in a high-energy system this is a process which must go on. British thought thus failed in a measure to provide a moral basis for much of what had in fact to take place in British society if it was to remain operable.
One could assume from the existing evidence that the factors that led to population growth in England were so powerful that nothing short of reduction to a subsistence economy could stop them. Thus because increased productivity by labor must be reflected in a constant increase in the population, whose bids for the land and tools needed for survival must increase rents and reduce wages to subsistence level, nothing could be done to improve labor’s lot. It was assumed that a similar natural law of competition induced entrepreneurs to invest any saving available. But if, as the theory held, interest supplied the motive for saving, there was no natural law inducing anybody to save when the consequence of competition was investment of savings to the point of zero interest. There was instead continuous evidence of continuous collaboration by businessmen to prevent “overinvestment” or “cutthroat competition.” Parliament and the courts were called upon to prevent such conspiracy in restraint of trade, even as they sought to prevent similar conspiracy on the part of labor. But this meant that political means were having to be used to produce what was supposed to be “natural” behavior, so powerfully motivated that nothing could interfere with it. It thus became clear that man’s economic behavior was not what the theory explaining it would lead us to expect. In fact, justification for the strictures against conspiracy came not from some inherent element of human nature but from the religious and moral precepts found in British culture which held that it was man’s duty to produce all the material wealth it was possible for him to produce. Hence, any conspiracy which reduced the production of goods and thus denied them to the consumer took from him what it was his “right” to have. This is a fact not generally accepted; even so recent a writer as Veblin ascribed increased production to an instinct which drives man to be productive just as the reproductive instinct impels him to perpetuate and increase the species.
Moral and religious factors
Such works as those of Tawney and Weber discuss the significance of the underlying moral and religious system as it relates to economic production. The tremendous part which Protestant ethics played in determining both that “progress” should take place and how it should take place is shown clearly. Their position would make this moral code the cause of the accumulation of converters. For us it would be meaningless to ask which came first, the moral system which engendered conditions necessary for increases in productivity, or the production which led men to propagate a system which would make moral what they were doing. As we have shown, the interrelation between social structure and the flow of energy permits no point to be taken (except arbitrarily for the purpose in hand) as “the beginning.”
Assuming, then the fact that the whole of English culture was more or less involved in the transition, what we want to know is “what facts were most clearly and immediately responsible for the accumulation of converters?” Whatever else we find, it is quite clear that a large part of the accumulation was not the product of abstention. As we have already seen, the accumulation represented in considerable part the gifts of nature from hitherto unexploited continents. Moreover, many of the claims made on the flow of goods in the old country represented the product of land to which title was originally established by military conquest, handed out to the followers of the conqueror in amounts totally unrelated to any previous abstention on their part. Similarly, a substantial share of the goods which were used to motivate shipbuilding came from the seizure of products of America and the Orient. Title to them was secured by the British and the Dutch through military power, which enabled them to compel the Spanish and Portuguese to disgorge their loot, much of which was taken from the “natives.” Many of these goods were either directed straight to consumption by the sea lords or were used by them to induce others to direct food and labor to the production or more ships. It was only after this process had reached the point where continued expansion depended upon the use of the recurring product of the low-energy systems that decisions of the type traditionally cited as the source of capital began to be very important.
The business elite
By this time the power of the trader and the industrialist was so well established that abstention on their part was hardly required to keep the flow going. Thus to locate the source and determine the nature of the choice between using surplus for more converters or using it for more consumption goods we must deal with the values of this small group of businessmen. Weber and Tawney and their followers have placed considerable emphasis upon the religious and moral attitudes which caused businessmen to consider themselves to be the elect of God, bound by their stewardship to efficient production. Veblen, and others, emphasized conspicuous expenditure and conspicuous leisure as aims. In company with others, we must emphasize also the development of power for power’s sake.
Whatever his motive, the businessman depended on having political power sufficient to enable him to continue to force such changes as he thought were required to secure efficient production. To this end he turned over part of the new surplus to the government, which thus was put into position to determine the future course of some of the surplus produced. This could be used for exploration, conquest, subsidy, and legislation leading to further productivity, to conspicuous consumption by the court, or to widespread diffusion in the form of bread and circuses for the multitude. Which course was chosen is a matter to be discovered in the intimate history of the particular court of the period. In addition to the sources cited above, there were other savings not induced by the taking of interest. Men fearful of disaster and crises, aging and death, or necessarily interested in accumulating such funds as dowries for their daughters or land for their sons had to save and, far from expecting interest, frequently would have paid somebody to protect their savings. The factors responsible for the actual accumulation of converters in England were many and varied and hardly to be accounted for by the official theory that interest rates have determined savings and investment.
Rent was also a means of accumulating converters. Justification for control over the income from land was derived from the feudal world or from long usage. Royalties from coal mines, for example, represented a windfall to the landowner and had nothing to do with his prescience, his past frugality, or his performance of social function. Like a good many of today’s windfalls, it might be attributed to luck, but it was more frequently held to be an evidence of God’s intention to reward the elite. Gains from trade were similarly an evidence of “fortune” or of destiny.
During the long reign of sail, then, many of the conditions necessary to further expansion of converters became imbedded in British culture and sanctioned by custom, law, and religious belief. Only a few of these conditions were recognized for what they were by those seeking to understand and explain the British economy. So when their explanation was used as a guide in efforts made elsewhere to accumulate converters, the results were seldom as expected.
Accumulation through exploitation
The typical situation in low-energy society, in which physical goods were produced in a social matrix in which material and nonmaterial means were alike considered to have a meaning beyond their obvious characteristics or their instrumental functions, gave way as trade expanded to one in which goods came to be known only by their ability to perform such instrumental functions. The great expansion of trade made Englishmen dependent upon goods produced all over the empire under conditions totally unknown (and frequently unknowable) to their consumers. In urban areas, the fact that the food consumed was not locally produced broke the intimate association of consumption and production and interfered with the sanction of ritual, magic and religion, which affected the volume and nature of production. These city people were frequently unaware of and unconcerned with the conditions under which food was produced. No change in their value systems was required to make it possible for them to accept food from abroad in preference to that raised in England. They chose to accept cheap food from abroad because the cheap energy of sail delivered it to them at less sacrifice of their own values than was demanded by English farmers seeking to maintain or improve their own position in relation to the urbanites. The production of goods in the city for the market rather than for consumption within a community sharing common values robbed many of the previous norms of production of any functional meaning for the buyer. Thus the rate of exchange considered to be “normal” or the “just price” agreed upon where stable conditions long endured, ceased to be an effective measure of wealth. As we have seen, the use of the ship also forced a change in the concept of the just price for money and in the attitude toward moneylending. The danger of loss of the ship and its cargo made some sort of insurance not only allowable but necessary. Conversely, the enormous gains possible with the use of the ship made their division among a number of owners seem to be more equitable than their concentration in the hands of the ship’s captain or a merchant prince. Thus, while the great bulk of the people of the world continued to consume and produce in a tradition-sanctioned world, on a constant-cost, constant-price basis, a few men in the trading nations, Britain in particular, were permitted and encourage to share the gains of the new energy system.
Although English traders did engage in what Veblen had termed conspicuous expenditure, they also invested tremendous amounts of the new energy in production goods. Consumption itself ceased among them to be the sole measure of status; since abstention from consumption could result in tremendous increases in power, which could in turn be transformed into still more power, that power rather than the ability conspicuously to consume often became the index to status.
The process was accentuated in the British realm by the system of primogeniture and entail. This gave control over all the landed estate of the family to the eldest son. The younger sons, deprived of the opportunity to rival the achievements of their elder brothers, migrated in great numbers to reestablish in the New World a system that often yielded even greater surpluses than that of the ancestral lands. On the enormous expanse of new continents the old system was used to concentrate control over products of tremendous value. The plantation system of the Old South was extremely well adapted for the accumulation of the means to investment even if the social norms prevailing there were to cause that surplus to be largely invested elsewhere. The plantation system never resulted in a high plane of consumption by the slaves and indentured labor who cooperated in production, but it did make possible a high plane of living for the owning class and produced the dominant leaders of the United States for a considerable period.
In England the changes in technology which caused plants to be replaced by coal and falling water as the major source of surplus energy received no immediate recognition. The old patterns justifying control over surplus remained for a long time intact. When resistance to the necessary changes was encountered, and profits in England were diminished as compared with what could be gained in the colonies or other available areas, investment abroad was sanctioned. Religious conversion, cultural enlightenment, technical advance, and profitable enterprise were conceived to be necessarily related one to another. There was in those days no powerful group to contest the right of the investor to take the product of English mines and factories to the ends of the earth if he so wished. England had access to all those areas which could be reached and dominated by the use of sea power. If the value system of one area was resistant, another could be selected. At first, because the British trade was with local nabobs, there was no need to change native low-energy systems much. The still comparatively small output of high-energy converters in England could be disposed of by dealing with a small ruling class. The probing finger of trade sought out the weak spots in all the coastal cultures; situations where surpluses generated in the British Isles might be traded for raw materials, luxuries to satisfy British consumers, or promises to pay. This would satisfy British capitalists whose status and prestige at home could be enhanced by such evidence of their ability to control the flow of energy. As trade increased, however, more changes were required in the countries invaded by trade. The degree to which the trade system became acceptable among the people with whom the British traded did, of course, vary. In large parts of China no extensive break with traditional concepts of the necessary relation between production and consumption has yet occurred. Not much more was accomplished in India or in some parts of Africa. In the Americas and the Commonwealth countries, however, the social system of the native was disorganized and finally destroyed. Over most of North America, Protestant British institutions replaced those of Catholic France and Spain, which seemed less suitable to minister to the new techniques, although there do remain areas in which the older institutions still show their influence.
Comparisons and contrasts
The westward movement in the United States constantly recreated low-energy systems and sometimes produced enclaved regions that reverted to a subsistence economy; however, the low-energy systems established were not able, except in the South, to create a culture sufficiently rooted and stable to prevent the subsequent rise of the new pattern. The continent’s resources in many cases got into the hands of those who were little bound by traditional morality, not moved by considerations of status, community, or family control to preserve the old ways, who felt no spirit of noblesse oblige to look out for those weaker than themselves. This resulted in changes in the old system undertaken in the name of “progress” and justified by the new religion, pragmatism. In rural regions, however, the Puritan spirit helped prevent the rise of any great demand for consumption goods. It provided an ethical system that was an excellent milieu for the accumulation of converters. Where resistance was encountered, the surplus produced was adequate to increase power at an unheard-of rate and at the same time to support politicians, persuade the clergy, endow schools, subsidize the press, and generally weaken the hold of old institutions. It was sufficient also to provide through public services the education, propaganda, and advertising to cause the old ways sanctioned by traditional culture to be supplanted by new ones justified by the production of new goods and services.
The advance was not even, nor was it uniformly successful, and regions vary in the degrees to which urban, secular, and pragmatic sanctions have replaced the traditional ones. All the British dominions in some degree faced similar situations. New Zealand and Australia were required to make few concessions to low-energy systems of either the native or the imported variety, but Canada finds in the descendants of old-regime France many of the same problems as have been presented by the Deep South of the United States.
Germany
Germany, on the other hand, while deliberately copying many of the techniques used in England and the United States to increase physical productivity, developed high-energy technology in an area where ideals and values varied considerably from those found in England. Feudal landlords and the militarists with whom they were allied played a much greater role in determining the rate of diversion of energy into converters and the purposes to which the new surplus would be put. Great emphasis was placed on the power produced rather than on the individual consumption good to be secured. Surpluses from the newly available energy were put into the hands of a ruling class which was not required to share power to the degree that the British aristocracy had been. These surpluses were devoted to the creation of new converters at a rate even higher than in England and, considering the size of the stock of converters and the nature of the natural resources with which they had to work, even higher than in the United States. Such concessions, as were wrung from the ruling classes, took the form more often of free public services than of privately selected consumers’ goods. Increasingly, education became a matter of receiving training in the techniques necessary to carry out socially prescribed duties rather than of learning for self-fulfillment. The values taught in the schools justified the diversion of energy into new converters in terms of collective rather than individual gain. Most important was the diversion of energy into the tools of war. These were twice unsuccessfully gambled in the effort to create a system that would place the resources necessary for German industrialization beyond the reach of British sea power. There never was distributed in Germany the flow of privately owned consumers’ goods which so successfully justified continuous expansion of the high-energy system to the people of the United States. Nevertheless, the system worked in such a manner as to bring Germany to a level of physical productivity far above that of many other areas that subscribed to the “free enterprise” system that is so largely dependent upon increased distribution of consumers’ goods to justify increased production of producers’ goods.
France
The French have not been able to modify their old system sufficiently rapid enough to keep pace with the areas just discussed. Their situation is similar to the other industrialized states of northern Europe. In France, those who currently control much of the surplus being produced have contented themselves with agreements that hold present techniques and present prices more or less sacrosanct. They dispose of such earnings as they control by investment in the more productive areas abroad. French adherence to the international free market preserves this right to French capitalists, who have frequently invested abroad a sizable fraction of the amount that others, such as the American government, were at the same time investing in France to increase the ability and determination to defend “free enterprise” there. The French are neither motivated by the German’s sense of duty nor by the American approval of hard work and high consumption of material goods. They accumulate converters at any considerable rate only under the stress of war or preparation for it; their refusal after the First and Second World Wars to increase their war potential sufficiently to keep their place as a great power portends a diminution of their ability to shape their future.
The slow accumulation of surplus of the small French investor, who seeks to gain through saving the security denied him by the limited size of the family he raises and by the absence of extensive systems of social insurance among the peasants and small businessmen has not provided the energy flow necessary to maintain France’s previous place in the world. Since World War II, there has been a very rapid increase in domestic investment. Low wage earners from Africa and Italy have made it more profitable than the hazardous investment abroad that has accompanied the dissolution of the empires. But the increasing share that goes to big industry is changing patterns of both savings and investment.
Japan
The Japanese rise to power makes the traditional explanation of the accumulation of converters seem even less plausible. Under feudalism, a few great families had gained control over an enormous proportion of the surplus energy produced. Religion, law, and morality if possible, more effectively sanctioned their control than that of the feudal lords of Germany. Confronted with a competing system which proved to be, militarily speaking, more powerful than that which they controlled, they quickly set out to discover the sources of its power. They were not impressed by the official explanation and the traditional structure offered by British theorists; they found the German methods to be more congenial to their own culture. Their success was enormous, but they failed to understand all its roots. They took for granted the world market that the British had built up, in which they could function with almost no payment for the social organization that had made it possible. But after the First World War, the picture changed. The British position of power was much impaired. The United States and the Commonwealth had begun to produce respectable stocks of converters of their own. The resurgence of German industry, unhampered by the burden of debt and other obligations, which was not lifted from the British, was great and rapid. British supremacy over the investment market and over the world market for commodities was shaken. Nationalistic controls, established in the interest of national integrity, as opposed to free trade, now intervened to limit the international market for Japanese products. Furthermore, the Japanese failed to recognize that the surplus, which they controlled at the outset of the revolution, was a consequence of the long-continued policies of limiting the birth rate. As they shifted to high-energy converters, there was great increase in population, much of which located in urban centers. This changed the relationships between parents and the opportunities their children could find elsewhere. Japan’s farmers were totally unable to feed the new population. Japan was competing with other Asiatics for food from abroad and the opportunity to pay for food with cheap exports diminished. So, like Germany, Japan turned its high energy system into a program of expanded military power. As in Germany, this was twice unsuccessfully gambled in the effort to secure a base on which Japan could develop industrialized agriculture.
Since World War II, the United States policy of limiting the expansion of Communism supported a very rapid expansion of industry in Japan, and tremendously increased its dependence on the industrialized agriculture of America and the British Commonwealth. It is quite apparent that the formula offered by those who believed in Free Enterprise as the way to industrialize had little to do with the development of either Japan or Germany.
Marxian theory and Communist practice
We have already shown why it is hard to find, in the official capitalist explanation for the accumulation of converters, any satisfactory account of what actually happened in the West. It is even more difficult when we come to examine the efforts of the U.S.S.R. Basically the official Marxian analysis rests on fallacy. This is it is founded on the labor theory of value. The English chose a logic which supported the moral right of the capitalist to the increases in productivity which accompanied the increased use of surplus energy. The Marxians deny any such moral right to the capitalist or landowner but grant it to labor. Now if, as we insist, converters are a cost involved in the use of high-energy techniques, they represent no consumable goods as such and can no more be claimed for consumption by labor than by capital. Confronted with this fact the Marxians, like the Westerners, rather than repudiate their tradition, have chosen to act on other premises than those they claim to be following.
Marx himself recognized that there must by concentration of control if there was to be industrial advance. He thought his projected revolution would take place in an already industrialized state such as Germany. The capitalist would thus make the transition from low to high energy society possible, after which the proletariat would assume dictatorial control and redistribute the wealth the capitalists had “robbed” the worker of. Instead, the Bolshevists seized control in a very “backward” country which had not passed through the capitalist phase. So Marx’s grand design was never followed.
The Bolshevists recognized fairly early the gains to be derived from high-energy technology. The communism of their first efforts, which distributed widely the land, durable consumers’ goods, and control over what little stock of high-energy converters existed, soon showed itself to be a system which would rapidly regress toward a low-energy village community and family-dominated economic pattern. Like the French before them, the Russian peasants, once in control of the land, became very conservative. As a result, the movement toward further progress in the direction of Bolshevist goals came to depend almost entirely upon industrial workers of the cities. They rather quickly discovered that in the absence of a workable industrial system that could quickly deliver consumers’ goods they were likely to be starved by the peasants. In consequence, a whole series of measures to deny to both peasants and workers control over the surplus energy they produced was reestablished. All available goods which could be used in exchange for converters from the West were taken ruthlessly from whoever controlled them and sold abroad. Population not needed on the farms or in the cities was gathered into pools and often worked to death to build the dams, canals, roads, railroads, and buildings necessary to supplement these converters. To rationalize the failure to distribute immediately the products of the stock of converters so acquired, the myth of “the workers’ state” was propagated. The old IWW used to proclaim that the purpose of the church was to teach the workers “You’ll get pie, in the sky, when you die,” whereas the capitalists eat pie today. Marx called religion “the opium of the people.” In both cases the argument was that religious means can induce men to surrender that which they have produced and therefore have a “right” to consume. The succession of Five-Year Plans was supposed to reduce the interval between performance and Utopia, but it was designed along exactly the same lines that Marxians always claimed represented a despicable effort on the part of capitalists to rob workers of their just due.
Acting under the myth that theirs is a workers’ state, and within the semi-Asiatic culture of the area dominated by the U.S.S.R., Soviet leaders have in large part turned the new surpluses available to the production of converters and the durable structures required to make them work. The productivity of some of their basic industries approaches that of many areas in the West, but the worker as consumer finds only slight increase in his consumable income. From this, he can save little and what he does save is recirculated through the productive system. Like the German worker under the Nazis, he receives what gains he does get largely in the form of collective services such as housing, health and education. He cannot choose to spend much of this small income on goods and services that reduce his capacity to produce, like alcohol, nor can he compel available energy to be devoted to the production of goods the technical experts think will contribute less to future productivity than those they propose. The Russian system of accumulation, then, depends hardly at all upon the free choice of consumers to save and invest. On the other hand, the insistence upon the ruthless use of power to increase the stock of converters makes their system resemble in many ways that which many capitalists label as “progress”, for it does make the accumulation of “capital” the primary aim of public policy.
The culture of the Russians to a very great degree is a product not of high-energy but of low-energy experience. Much of what is now being done there could once have been done but no longer can be done in other areas which are now industrialized. In these areas the consequences of industrialization were such that it was impossible, once the critical point in increasing the stock of converters was reached, to continue the processes by which this point was reached. Thus, it is possible that some of the inevitable consequences of the use of high-energy converters will force a change in the Russian system if it succeeds in attaining (if it has not already done so) and retaining the necessary ratio of population to available energy.
Whatever the future may hold for the Russian system and however it may be changed, we must not neglect to analyze the actual process by which the present stock of converters was secured. The first steps toward the accumulation of this stock were, in terms of Communist aims, very successful. The Russians were able to make use cheaply of the enormous gains in technology which the West had achieved only as a result of expensive experiments and costly errors, such as the building of equipment and physical structure that was obsolescent as soon as it was completed, technologically inefficient distribution of population, and the creation of technically “inefficient” values and beliefs. The operations of the Western economic system permitted the Communists to import during the depression in the West a great deal of physical goods at considerably less than their actual cost of production. The Bolsheviks benefited from the liquidation of those in Russia who held durable consumers’ goods which could be traded and from rapid exploitation of the easily secured resources which manpower could deliver. The recurring threat of war made it possible to use the nationalistic values and attitudes developed in the past in “Mother Russia” to call forth heroic efforts toward industrialization to further military preparations. But this situation also diverted surplus energy from the production of converters which could have been used to produce consumers’ goods. Instead it was used to produce planes, tanks, guns, atom bombs, and thermonuclear weapons and the equipment to make them, and which must ultimately either be destroyed in battle or become obsolete. A great deal of it went to produce a very large navy. Thus it is very difficult to make any estimate of Communist success as compared with what might have been accomplished had British and American rather than Marxian and Russian ideas and institutions prevailed. Perhaps, however, a little more historical perspective will show that the actual processes involved in accumulating converters in the U.S.S.R. are not as different from those elsewhere as either capitalist or Marxist purists would hold.
It is not our purpose here to try to evaluate all the consequences of either approach to the problem. Our concern is with the problem as it is to be faced in the future, and the study of the past must deal with the facts of the past regardless of the degree to which they support or contradict the myths that are officially used to explain them. It becomes clearer as we observe the actual relations between saving and investment in the West today that abstention by individuals faced with the choice between consuming and saving has much less to do with what is invested in particular industries than official explanation would hold. In fact it is, as the struggle between Keynesians and anti-Keynesians shows, the disparity between savings and investment that represents one of the crucial problems for Western economic theory.
Modern technology and international disequilibrium
But of far greater import for Western theory is the fact that the very spread of high-energy technology has so upset long-established relations between the peoples of the earth that the whole of the twentieth century has been characterized by war and the preparation for war. The tremendous diversion of energy into the converters needed to carry on mechanized war has led to a paradoxical situation. While continuing to adhere to the official dogma that in pursuit of private profit a society will accumulate converters more rapidly than by any other method, the West, led by the United States, has embarked upon a program in which military need under political direction has greatly supplanted the consumers’ choice in determining the rate of accumulation of converters. The free choice of the consumer in the market place is made subservient to the power of groups to affect public policy and to the choice of the voter in the polling booth. The fear of the spread of communism has resulted in the accumulation of converters at a rate and in forms very different from what they probably would have been in response to the demand of households for consumers’ goods. This is evidenced by the reaction to taxation which reduces the opportunity to buy those consumers’ goods and to rationing systems which control physical production directly. It is not widely believed that a return to private international investment undertaken in competition with domestic demand for goods which require domestic investment would suffice to put resources where they are needed to stop the trend toward communism. So by collective political decision they are put there anyway! But this state-directed system of determining the rate of accumulation and its location is parallel in many respects to the policies actually adopted in communist states. There also the demand for consumption by households is made subservient to the need of the state to fight the inroads of the “enemy.”
Similarly, replacement of individual savings by “Social Security” and “welfare” systems of collective forced savings as a means of dealing with the time preferences of the individual or of anticipating probable future needs at the present time characterizes all the areas of the old British system as well as most of the rest of the West.
The only thing about this control that is new is the degree to which political rather than economic motives govern those who exercise the choice between investing and not investing. The great corporations and the investment bankers were making just such collective judgments long before “government” played any great part in them, and before them the feudal lords and the robber barons did so. In fact, it is quite possible that it was the refusal of such as these to acquiesce in the demand for “goods now” by the consumer rather than any self-denial on their part which gave rise to the stock of converters upon which the defense of consumers’ free choice rests today.
What has been said here has not been an attempt to give a thumbnail history of high-energy society but to cite some of the experiments which have been made, however blindly—and however intermingled by historians with other movements—in the accumulation of the necessary production goods. We have shown something of the modifications of the social system which are required permanently to divert from immediate consumption into production goods, energy adequate for the creation and maintenance of a high-energy system. In summary we may say that high-energy technology requires the diversion of an ever-mounting volume of energy into goods which are not ends but means and requires in justification of such diversion the emergence of a morality to sustain itself. High-energy technology also requires a continuous modification of the habits, training, and occupation of enormous numbers of people: their activities, ceasing to be ends in themselves, require justification in new and different terms. As to the kind of system that best supports and sustains these operations, we have only the very limited evidence provided by the experiments that have so far been undertaken, and there are so many variations in the cases as to make any scientific demonstration of an exact character impossible.
We do know, however, that a morality which delays or obstructs these necessary operations renders a society very vulnerable. For societies which have made the necessary social changes and have accumulated a stock of converters have enormous surpluses which enable them to place limits upon the choices that can be made by those living in low-energy societies. Some of the areas that never have made the transition but do possess natural resources, such as petroleum, now must use a great deal of the income they get from the sale of raw material to buy the arms necessary to protect their control over those resources. So the kind of saving and investment called for by the classical economics has little likelihood of becoming a major source of capital.
Capital formation is a very complicated process in all of the industrialized societies. Careful research has shown that it is dependent upon a great many institutional arrangements and upon value hierarchies shifting in response to many kinds of change. But with rare exceptions, all of these analyses put more emphasis upon monetary and fiscal policies than upon demographic ecological or technological factors. Econometricists depend upon the use of money as a common denominator; they rely upon the forces of supply and demand to make adjustments to, or override the effect of, forces not measured in monetary terms. But there is a mounting wave of resistance to this model in policy making. Demographers, ecologists and engineers are more and more effectively showing the necessity “in the long run” to take into account things that cannot be measured by price but which are basically altering human relationships. Obviously a study which measures only in terms of energy is also inadequate to supply complete answers. But if our thesis is correct, and energydoes set limits on what men can do, analysis in energy terms may reveal some things that price measured analysis cannot deal with. So we will look at production and distribution in the energy context.
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