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A year ago I predicted that there will be a “decoupling from the unwinding“, as “emerging markets” by and large ride out the temporary shocks of declining Western demand for their exports (China) and the interruption of Western credit intermediation (Russia) before resuming growth. This is one aspect of the trends leading to the imminent demise of Pax Americana, which will be replaced by “the age of scarcity industrialism” / “a world without the West“. We are now entering this Empire’s endgame.

After briefly stalling in early 2009, China’s economy roared back to life on the back of massive credit loosening to build (or overbuild) infrastructure and industrial capacity. Though not the most efficient use of resources, it did have the advantage of 1) maintaining growth, 2) forestalling the social unrest that would rise up if it wasn’t, and 3) at least Chinese investments went into building up their real economy (amongst other things, it became the world’s largest producer of wind turbines and photovoltaic panels in 2009), instead of the pork and oligarch welfare programs more characteristic of the US “stimulus”. And though Russia’s GDP contracted by 7.9% in 2009 – far higher than expected by most commentators, largely thanks to the dependence its big corporations acquired on continuous flows of intermediated Western credit – it began to slowly recover from mid-2009, industrial output is now rising at a fast clip, and investment banks are predicting growth of 4-6% for 2010. The other two BRIC’s, Brazil and India, didn’t have too many problems at all since they had neither a big credit nor trade dependence on the submerging Western markets.

In the long-term, I argued that the brunt of the crisis would fall on the “submerging” Anglo-Saxon markets, thanks to their “charades over “quantitative easing” (translation: printing money), transfer of toxic “assets” onto the public account”, and unsustainable fiscal stimuli. Today, the American political system is for all practical purposes broken. Republicans won’t agree to tax increases, Democrats won’t agree to cutting entitlement programs. The legislative process is reverting to that of the 17th century Polish-Lithuanian Commonwealth, when a single veto could (and did) prevent anything being agreed on in their Sejm, or parliament. (Hint: the ultimate consequences weren’t good for Poland).

The inflated hopes and expectations accompanying Obama’s accession to power were indeed, just as I suggested on his election, “greatly constrained by financial and institutional realities”. He is a weakling President, alternating between meaningless populist rhetoric and pandering to the Wall Street oligarchs; scorned by the left as Bush II with gloss, and condemned by the right as a foreign Marxist Islamofascist: his policies and outreaches failing at home and abroad, rejected in his own heartlands, these outcomes are engendered by and in large part made inevitable by his hopelessly pollyannish belief in his own messianic powers of compromise and persuasion.

If you think things look bad now, with the budget deficit at 10% of GDP for 2009 and a similar figure projected for 2010, don’t look at what awaits us in a few more years. The fiscal pressure is only going to increase as the baby boomers start retiring, and as long as the US remains a populist democracy the public will not allow it to cut entitlements (at least until China and the world’s oil exporters force it on them). For instance, the Congressional Budget Office believes that the US will never again run a balanced budget, and you can guess its consequences for American global power. Furthermore, this doesn’t take into account that 1) the vast majority of prior budget forecasts have been optimistic and 2) this assumes that none of the potential breaking-points that could doom Pax Americana (which I’ve identified as imperial overstretch, geopolitical shocks, and oil-credit perturbations caused by peak oil) come to pass.

As shown above, the US has had an almost continous budget deficit since the start of its “age of diminished expectations” in the 1970′s, funded by investors willing to buy up its Treasuries, accepting low returns in exchange for America’s perceived status as a “safe haven” (so-called “American alpha”). Yet with the American empire crumbling at the margins and their own most optimistic forecasts predicting a structural deficit into the foreseeable future, will investors continue buying up Treasuries – or will they turn to more promising emerging markets? Could it even be possible that the US is already in its imperial endgame, as argued by John Michael Greer?

A different reality pertains within the Washington DC beltway. Where states that fail to balance their budgets get their bond ratings cut and, in some cases, are having trouble finding buyers for their debt at less than usurious interest rates, the federal government seems to be able to defy the normal behavior of bond markets with impunity. Despite soaring deficits, not to mention a growing disinclination on the part of foreign governments to keep on financing the same, every new issuance of US treasury bills somehow finds buyers in such abundance that interest rates stay remarkably low. A few weeks ago, Tom Whipple of ASPO became the latest in a tolerably large number of perceptive observers who have pointed out that this makes sense only if the US government is surreptitiously buying its own debt.

The process works something like this. The Federal Reserve, which is not actually a government agency but a consortium of large banks working under a Federal charter, has the statutory right to mint money in the US. These days, that can be done by a few keystrokes on a computer, and another few keystrokes can transfer that money to any bank in the nation. Some of those banks use the money to buy up US treasury bills, probably by way of subsidiaries chartered in the Cayman Islands and the like, and these same off-book subsidiaries then stash the T-bills and keep them off the books. The money thus laundered finally arrives at the US treasury, where it gets spent.

It may be a bit more complex than that. Those huge sums of money voted by Congress to bail out the financial system may well have been diverted into this process – that would certainly explain why the Department of the Treasury and the Federal Reserve Bank of New York have stonewalled every attempt to trace exactly where all that money went. Friendly foreign governments may also have a hand in the process. One way or another, though, those of my readers who remember the financial engineering that got Enron its fifteen minutes of fame may find all this uncomfortably familiar – and it is. The world’s largest economy has become, in effect, the United States of Enron.

And it’s not only tree-hugging Druids that are raising the alarm. Niall Ferguson, court historian for Pax Americana, is also tolling the bell for its imminent demise on the pages of the Financial Times (A Greek crisis is coming to America).

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect. …

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941. …

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). [AK: Yes, Britain is screwed. So is Japan]. Then came Ireland, Spain and Greece (9 per cent). [AK: The PIIGS (Portugal, Italy, Ireland, Greece, Spain are screwed too, especially Greece and Spain at this point]. And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $15,000bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months. [AK: This refers to the dreaded "debt compound trap", in which the real costs of servicing debt spiral out of control and the only way out is restructuring (partial / negotiated default) or "monetization" of the debt (inflation). PS. The "debt trap" is essentially what brought down the regime of Louis XVI in 1789].

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. [AK: Ha!] But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

The US is a weakened skier and is now hurtling towards a rock-strewn double black for which it is not prepared in any way, shape, or form. But at least for now, its position looks stable – after all, it grew at an annualized 5.7% in Q4, 2009 (half due to inventories buildup). The same cannot be said of Greece and the Eurozone, which seem to be approaching a major crisis in mid-2010.

Afflicted with a dysfunctional political system and chronically unable to balance its budget (sound familiar?), yet without the manifold benefits of “American alpha”, Greece is facing a looming default propelled by a 13%-of-GDP budget deficit (even granting full benefit of the doubt to Greece’s dodgy statistics service), public debt at 113% of GDP (well above the 60% limit imposed by Maastricht), and draconian austerity plans that are politically unrealizable.

If Greece were to impose the draconian pay cuts under way in Ireland (5pc for lower state workers, rising to 20pc for bosses), it would deepen depression and cause tax revenues to collapse further. It is already too late for such crude policies. Greece is past the tipping point of a compound debt spiral. …

Remember, Athens holds the whip hand over Brussels, not the other way round. Greek exit from EMU would be dangerous. Quite apart from the instant contagion effects across Club Med and Eastern Europe, it would puncture the aura of manifest destiny that has driven EU integration for half a century. …

No doubt, EU institutions will rustle up a rescue. RBS says action by the European Central Bank may be “days away”. While the ECB may not bail out states, it may buy Greek bonds in the open market. EU states may club together to keep Greece afloat with loans for a while. That solves nothing. It increases Greece’s debt, drawing out the agony. What Greece needs – unless it leaves EMU – is a permanent subsidy from the North. Spain and Portugal will need help too.

The danger point for Greece will come when the Pfennig drops in Berlin that EMU divergence between North and South has widened to such a point that the system will break up unless: either Germany tolerates inflation of 4pc or 5pc to prevent Club Med tipping into debt deflation; or it pays welfare transfers to the South (not loans) equal to East German subsidies after reunification.

Before we blame Greece for making a hash of the euro, let us not forget how we got here. EMU lured Club Med into a trap. Interest rates were too low for Greece, Portugal, Spain, and Ireland, causing them all to be engulfed in a destructive property and wage boom. The ECB was complicit. It breached its inflation and M3 money target repeatedly in order to nurse Germany through slump. ECB rates were 2pc until December 2005. This was poison for overheating Southern states.

And according to Stratfor:

The crisis is rooted in Europe’s greatest success: the Maastricht Treaty and the monetary union the treaty spawned epitomized by the euro. Everyone participating in the euro won by merging their currencies. Germany received full, direct and currency-risk-free access to the markets of all its euro partners. In the years since, Germany’s brutal efficiency has permitted its exports to increase steadily both as a share of total European consumption and as a share of European exports to the wider world. Conversely, the eurozone’s smaller and/or poorer members gained access to Germany’s low interest rates and high credit rating. And the last bit is what spawned the current problem.

Greece now has the following choices:

1) Balance the budget. To do this Greece would have to cut its government spending by as much as half, resulting in sky-rocketing unemployment (20%+) and severe social unrest. Greeks are volatile, not like disciplined Germans or apathetic Latvians.

2) Leave the EMU. And print a New Drachma to inflate away its debt into oblivion, as was once typical for the Med nations. But then it would lose its geopolitical anchor in Europe and lose access to any further foreign investor money. According to Willem Buiter, this isn’t too likely.

Would a eurozone national government faced either with the looming threat of default or with the reality of a default be incentivised to leave the eurozone? Consider the example of a hypothetical country called Hellas. It could not redenominate its existing stock of euro-denominated obligations in its new currency, let’s call it the New Drachma. That itself would constitute a further act of default. If the New Drachma depreciated sharply against the euro, in both nominal and real terms, following the exit of Hellas from the eurozone, the real value of the government debt-to-GDP ratio would rise. In addition, any new funding through the issuance of New Drachma-denominated sovereign bonds would be subject to an exchange rate risk premium, and these bonds would have to be sold in markets that are less deep and liquid that the market for euro-denominated Hellas debt used to be. So the sovereign eurozone quitter and all who sail in her would be clobbered as regards borrowing costs both on the outstanding stock and on the new flows.

A sharp depreciation of the nominal exchange rate of the New Drachma vis-a-vis the euro would for a short period improve the competitive position of the nation because, with domestic costs and prices sticky in nominal New Drachma terms, a nominal depreciation is also a real depreciation. Nominal rigidities are, however, less important for eurozone economies than for the UK, and much less important than in the US. Real rigidities are what characterises mythical Hellas, as it does real-world Greece, Italy, Spain, Portugal and Ireland. The real benefits from a nominal exchange rate depreciation would be eroded after a year – within two years at most – before you could say cyclical recovery. The New Drachma would be a little currency in a big global financial market system – not an instrument to be used to gain competitive advantage or to respond efficiently to asymmetric shocks, but a source of extraneous noise, excess volatility and persistent misalignments, rather like sterling.

A eurozone member state faced with the prospect of sovereign default, or just having suffered the indignity of sovereign default, would be immensely relieved to be a member of the eurozone. The last thing it would want to do is give up the financial shelter provided by membership in the eurozone to try and emulate Iceland, New Zealand or the UK.

3) Old-school default. And be shunned by the rest of Europe. Though threatening to blow up the bomb is to Greece’s advantage, since this will shift the burden to…

Europe – or precisely, Germany – having to make their choice.

1) Let them burn. Germany is getting impatient of being used as Europe’s cash cow for the past 60 years, and may simply tell Greece to deal with it herself. This will likely lead to spiraling debt service costs, fiscal-social-political breakdown, and heightened borrowing costs for the other PIIGS, maybe even a “cascading collapse” of Europe’s entire southern periphery (in the most extreme case, even Belgium and France would be threatened). This would finish off the EU as a meaningful institution, and with it will go the main vehice through which Germany and France wield power at a global level.

2) Berlin bails out Greece. Involves a different set of problems. A straight-out bailout will invite moral hazard and political dissatisfaction amongst the German electorate, who have had their wages constrained for years while the PIIGS wallowed in their bubbles. But all in all, preferable to the above scenario, or the prospect of a spreading crisis of confidence also forcing Germany to bail out Italy, Spain, or even France, all of whom have far bigger borrowing needs (and for which even Germany doesn’t have the resources). Therefore, Germany will probably lead an EU bailout of Greece (even though there is no formal mechanism for doing so) – but in exchange, it will want major political concessions.

But the days of no-strings-attached financial assistance from Germany are over. If Germany is going to do this, there will no longer be anything “implied” or “assumed” about German control of the European Central Bank and the eurozone. The control will become reality, and that control will have consequences. For all intents and purposes, Germany will run the fiscal policies of peripheral member states that have proved they are not up to the task of doing so on their own. To accept anything less intrusive would end with Germany becoming responsible for bailing out everyone.

Granted, at the moment the EU is stalling, not making any commitments; not surprising, given the cluttered and unwieldy talking shop that it is. But as Greece’s bond auctions (almost certainly) fail over the next few months to meet its soaring debt financing commitments, and as it falls into its debt compound trap, the fiscally secure nations – that is, primarily Germany – will realize the dangers of allowing the contagion to spread. And Germany in particular will see a chance to regain the sphere of influence over Mitteleuropa denied it since the Second World War.

Either way, in 2010 the EU institutions are going to be sidelined in favor of more workable, bilateral relations – especially between the Franco-German core and the weakening peripheries. The way will be opened for the return of Great Power politics to the European continent.

Looking further ahead, within a year the US will again enter a state of crisis. Based on Obama’s low popularity at the end of his first year (is he going to set a time record for failed Presidency?) and his loss of Massachusetts (!) to the Republicans, the political gridlock will only harden. As I forecast last September, “the feds will face challenges from the far-left (new Huey Long’s, anarchism, etc) and the far-right (demands for more state rights, anti-tax movements, “American reactionary patriots”, etc)” – though right now, the far-right movements appear to be the more powerful emerging faction (see the grassroots appeal of the reactionary, back-to-the-18th-century Tea Partiers, who in an electoral contest would now garner 17% of the vote – is the US finally going to see a powerful 3rd party?). PS. American corporations can now legally buy themselves political parties.

Second, in addition to the political problem, there will be a renewed economic and credit problem as the Second Wave of the Housing Crisis engulfs the nation because of rising defaults from adjustable-rate mortgages, many of which will be coming due by 2011.

And this brings us to a third problem, a renewed banking crisis. But this time, instead of withdrawing from emerging markets to the “safe haven” of the US, the banks will instead invest more into promising emerging markets (e.g. the BRIC’s) and commodity speculation (see peak oil), while divulging their US holdings and triggering capital flight. This will compount the political and economic problems, as America’s “rootless cosmopolitans” / financial and their political flunkies come under fire from both the far-left and right-wing producerist reactionaries.

Then there’s the fourth problem – peak oil. World oil production capacity may have peaked in 2010, and projections indicate that 2012 will see an accelerating downslide. This time there will be a both severe credit contraction, far exceeding the one in 2008-2009 (because this time capital will be fleeing the US) and soaring oil prices. The American consumer will live through a far more severe retrenchment than in 2007-2009, starting in 2011. The entailing fall in consumption will further reinforce the banking crisis, the wider economic crisis, and the political crisis. By this point, the “Tea Party”-Republican candidate may be well ahead of Obama, who by this point is utterly discredited.

Now what should Obama do? Note that by this time the Iran crisis will be coming to a head. Sanctions will have failed (China and Russia will see no reason to cooperate seriously). Israel will be getting extremely restless, since it treats the Iranian nuclear bomb as an existential threat. And Obama may well come to view a decisive resolution of the Iran issue as the only road still left open to him to claw back domestic and international legitimacy. However, Iran likely has the capability to block the Strait of Hormuz to oil tankers for several weeks using mines and anti-ship missiles. 20% of the world’s oil shipments pass through those narrow Straits. Needless to say, in a world entering the downslope of Hubbert’s peak, any disruption to global oil supplies will have tremendous, chaotic repercussions – economic, financial, political, and geopolitical – that we have no way of predicting in advance.

In conclusion, Pax Americana is going to face a series of severe crises in the next three to five years (and not only its lynchpin, the US). The European crisis, linked to the Med credit bubbles, is leading to the slow unraveling of the EU’s legitimacy in favor of its core states, France and especially Germany. It will come to a head in the next few months. Japan is facing an irredeemable fiscal and debt crisis, which will explode in the next few years: eventually, it will likely bandwagon with China (leveraging its technological base to gain favorable access to China’s markets and labor force) and ditch its post-1990 turn towards neoliberalism, which was never suited for the Japanese mentality anyway, in favor of Asian socialism.

Finally, the US itself will face a panoply of challenges – fiscal profligacy (stemming from its belief that it can have both guns & butter on a shrinking industrial base), imperial overstretch (Afghanistan, Iraq), political dysfunction, a new housing, credit, and economic crisis, soaring energy prices (disastrous for suburbia), and geopolitical challenges (Iran, China, Russia). It can deal with any one of them, but I can see no way how it would be able to deal with all of them coming within a few years of each other. The consequences?

Namely, there will be a partial collapse of legitimacy in the government; the feds will face challenges from the far-left (new Huey Long’s, anarchism, etc) and the far-right (demands for more state rights, anti-tax movements, “American reactionary patriots”, etc); fertility will collapse from the current replacement-level rates to around 1.3-1.7, as welfare shrinks and the utility of having children for the very poor, currently the most fecund social group, drops; crime will increase, etc. Yet within a decade a new social order will gradually emerge, probably fiscally and socially conservative and more authoritarian than the current one, and with it a new equilibrium will slowly, painfully come into being.

However, the US will almost certainly remain a Great Power. I certainly do not see it collapsing into separate states or regions, as dreamt of by the likes of Igor Panarin or Gerald Celente. In some ways, by casting aside its global imperial shell, it will actually become stronger – it will no longer be weighed down by the burden of global empire, and can focus on other activities the more effectively, such as reconstructing its industrial base and reinforcing its neo-colonial sphere around North America, the Carribbean, and perhaps Central America / Venezuela. Whatever form America’s new political economy takes (something resembling Putinism?, or maybe Chavismo?), it will likely be far better suited for the coming age of scarcity industrialism (characterized by economic statism, Realpolitik, and mercantile trade relations), than the crumbling colossus that is today’s Pax Americana.

(Republished from Sublime Oblivion by permission of author or representative)
 
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One of the most interesting emerging sciences today, in my opinion, is cliodynamics. Their practitioners attempt to come to with mathematical models of history to explain “big history” – things like the rise of empires, social discontent, civil wars, and state collapse. To the casual observer history may appear to be chaotic and fathomless, devoid of any overreaching pattern or logic, and consequently the future is even more so (because “the past is all we have”).

This state of affairs, however, is slowly ebbing away. Of course, from the earliest times, civilizational theorists like Ibn Khaldun, Oswald Spengler and Arnold Toynbee dreamed of rationalizing history, and their efforts were expounded upon by thinkers like Nikolai Kondratiev, Fernand Braudel, Joseph Schumpeter, and Heinz von Foerster. However, it is only with the newest crop of pioneers like Andrei Korotayev, Sergey Nefedov, and Peter Turchin that a true, rigorous mathematized history is coming into being – a discipline recently christened cliodynamics.

As an introduction to this fascinating area of research, I will summarize, review, and run an active commentary on one of the most comprehensive and theoretical books on cliodynamics: Introduction to Social Macrodynamics by Korotayev et al (it’s quite rare, as there’s only a single copy of it in the entire UC library system). The key insight is that world demographic / economic history can be modeled to a high degree of accuracy by just three basic trends: hyperbolic / exponential, cyclical, and stochastic.

Korotayev, Andrei & Artemy Malkov, Daria KhaltourinaIntroduction to Social Macrodynamics: Secular Cycles and Millennial Trends (2006)
Category: cliodynamics, world systems; Rating: 5*/5
Summary: Andrei Korotayev (wiki); review @ cliodynamics.ru; a similar text на русском.

Introduction: Millennial Trends

Google Books has the first chapter Introduction: Millennial Trends.

In 1960, Heinz von Foerster showed that the world’s population at any given time between 1-1958 CE could be approximated by the simple equation below, where N is the population, t is time, C is a constant, and t(0) is a “doomsday” when the population becomes infinite (worked out to be 13 November, 2026).

(1) N(t) = C / ( t(0) – t )

According to Korotayev et al, this simple formula of hyperbolic explains 99%+ of the micro-variation in world population from 1000 to 1970. Furthermore, a quadratic-hyperbolic equation of the same type accurately represents the increase in the GDP. Why?

He discusses the work of Michael Kremer, who attempted to build a model by making the Malthusian assumption that “population is limited by the available technology, so that the growth rate of population is proportional to the growth rate of technology”, and the “Kuznetsian” assumption that “high population spurs technological change because it increases the number of potential inventors”.

(2) G = r*T*N^a

(3) dT/dt = b*N*T

Above, G is gross output, T is technology, N is population, and a, b, and r are parameters. Note that dT, change in technology, is dependent on both N (indicates potential number of inventors) and T (a wider technological base enabled more inventions to be made on its basis). Solving this system of equations results in hyperbolic population growth, illustrated by the following loop: population growth → more potential inventors → faster tech growth → faster growth of Earth’s carrying capacity → faster population growth.

Korotayev then counters arguments dismissing such theories as “demographic adventures of physicists” that have no validity because the world system was not integrated until relatively recently. However, that is only if you use Wallerstein’s “bulk-good” criterion. If one instead uses the softer “information-network” criterion, noting that there is evidence for the “systematic spread of major innovations… throughout the North African – Eurasian Oikumene for a few millennia BCE” – and bearing in mind that this emerging belt of cultures of similar technological complexity contained the vast majority of the global human population since the Neolithic Revolution – then this can be interpreted as “a tangible result of the World System’s functioning”.

Then Korotayev et al present their own model that describes not only the hyperbolic world population growth, but also the macrodynamics of global GDP in the world system until 1973.

(4) G = k1*T*N^a

(5) dN/dt = k2*S*N

(6) dT/dt = k3*N*T

Above, T is technology, N is population, S is surplus per person (and S = g – m, where g is production per person and m is the subsistence level required for zero population growth), and k1, k2, k3, and a are parameters. This can be simplified to:

(7) dN/dt = a*S*N

(8) dS/dt = b*N*S

(9) G = m*N + S*N

As S should be proportional to N in the long run, S = k*N. Replace.

(10) dN/dt = k*a*N^2

Recall that solving this differential equation gives us hyperbolic growth (1).

(11) N(t) = C / ( t(0) – t )

Furthermore, replacing N(t) above with S = k*N gives (12), allowing us to work out the “surplus world product” S*N (13).

(12) S = k*C / ( t(0) – t )

(13) S*N = k*C^2 / ( t(0) – t )^2

Hence in the long-run, this suggests that global GDP growth can be approximated by a quadratic hyperbola. Other indices that can be described by these or similar models include literacy, urbanization, etc.

One finding is that after 1973, there world GDP growth rate itself falls (rather than just a slowing of the growth of the GDP growth rate, as predicted by the original model): the explanation is, “the literate population is more inclined to direct a larger share of its GDP to resource restoration and to prefer resource economizing strategies than is the illiterate one, which, on the one hand, paves the way towards a sustainable-development society, but, on the other hand, slows down the economic growth rate”. To take this into account, they build a modified model, according to which, “the World System’s divergence from the blow-up regime would stabilize the world population, the world GDP… technological growth, however, will continue, though in exponential rather than hyperbolic form”.*

The consequences for the future are that though GDP growth will reach an asymptote, technological improvements will continue raising the standard of living due to the “Nordhaus effect” (e.g. combine Moore’s Law – exponentially cheapening computing power, with the growing penetration of ever more physical goods by IT).

“It appears important to stress that the present-day decrease of the World System’s growth rates differs radically from the decreases that inhered in oscillations of the past… it is a phase transition to a new development regime that differs radically from the ones typical of all previous history”. As evidence, unlike in all past eras, the slowing of the world population growth rate after the 1960′s did not occur against a backdrop of catastrophically falling living standards (famine, plague, wars, etc); to the contrary, the causes are the fall in fertility due to social security, more literacy, family planning, etc. Similarly, the decrease in the urbanization and literacy growth rates is not associated this time by the onset of Malthusian problems, but is set against continuing high economic growth and the “closeness of the saturation level”.

(AK: This rosy-tinged analysis is persuasive and somewhat rigorous, but there is a gaping hole – they used only “technology” as a proxy for the carrying capacity. However, as Limits to Growth teaches us, part of what technology did is open up a windfall of energy resources – high-grade oil, coal, and natural gas – that have been used to fuel much of the post-1800 growth in carrying capacity (disguised as “technology” in this model), yet whose gains are not permanent because of their unsustainable exploitation. Furthermore, the modern technological base is underpinned by the material base, and cannot survive without it – you can’t have semiconductor factories without reliable electricity supplies – and generally speaking, the more complex the technology, the greater the material base that is needed to sustain it (this may constitute an ultimate limit on technological expansion). This major factor is also neglected in Korotayev’s millennial model. As such, the conclusion that the world has truly and permanently reached a sustainable-development regime does not follow. This is not to say that it is without merit, however – it’s just that it needs to be integrated with the work done by the Limits to Growth / peak oil / climate modelers.)

Chapter 1: Secular Cycles

Korotayev et al conclude that these millennial models are only useful on the millennial scale (duh!), and that typical agrarian political-demographic cycles follow Malthusian dynamics because in the shorter term, population tends to growth much more rapidly than technology / carrying capacity, which led to a plateauing of the population, growing stress due to repeated perturbations, and an eventual tipping point over into collapse / dieoff.

The basic logic of these models is as follows. After the population reaches the ceiling of the carrying capacity of land, its growth rate declines toward near-zero values. The system experiences significant stress with decline in the living standards of the common population, increasing the severity of famines, growing rebellions, etc. As has been shown by Nefedov, most complex agrarian systems had considerable reserves for stability, however, within 50–150 years these reserves were usually exhausted and the system experienced a demographic collapse (a Malthusian catastrophe), when increasingly severe famines, epidemics, increasing internal warfare and other disasters led to a considerable decline of population. As a result of this collapse, free resources became available, per capita production and consumption considerably increased, the population growth resumed and a new sociodemographic cycle started.

He notes that newer models are far more complex and predict the dynamics of variables such as elite overproduction, class struggle, urbanization, and wealth inequality with a surprisingly high degree of accuracy (e.g. see A Model of Demographic Cycles in a Traditional Society: The Case of Ancient China by Nefedov). Korotayev et al then list three major approaches to modeling agrarian political-demographic cycles: Turchin (2003), Chu & Lee (1994), and Nefedov (1999-2004).

1. Turchin has constructed an elegant “fiscal-demographic” model, in which the state plays a positive role by by a) maintaining armed order against banditry and lawlessness, and b) doing works such as roads, canals, irrigations systems, flood control, etc, – both of which increase the effective carrying capacity. However, as demographic growth brings the population to the carrying capacity of the land (in practice, the population plateaus somewhat below it due to elite predation), surpluses diminish. So do the state’s revenues, since the state taxes surpluses; meanwhile, expenditures keep on rising (because of the reasons identified by Tainter). Eventually, there sets in a fiscal crisis and the state must tax the future to pay for the present by drawing down the surpluses accumulated in better days; when those surpluses run out, the state can no longer function and collapses, which leads to a radical decline of the carrying capacity and population as the land falls into anarchy and irrigation and transport infrastructure decays.

2. The Chu and Lee model consists of rulers (including soldiers), peasants (grow food), and bandits (steal food). The peasants support the rulers to fight the bandits, while there is a constant flux between the peasants and bandits whose magnitude depends on the caloric & survivability payoffs to belonging in each respective class. However, it’s not a fully-formed model as its main function is to fill in the gaps in the historical record, by plugging in already-known historical data on warfare and climatic factors; they neglected to associate crop production with climatic variability (colder winters result in lesser crop yields) and the role of the state in food distribution (which staved off collapse for some time and was historically significant in China).

3. Nefedov has integrated stochasticity into his models, in which random climatic effects produce different year-to-year crop yields. One result is that as carrying capacity is reached, surpluses vanish and the effects of good and bad years play an increasingly important role – i.e. a closed system under stress suffers increasingly from perturbations. One bad year can lead to a critical number of people leaving the farms for the cities or banditry, initiating a cascading collapse. However, he neglects the “direct role of rebellion and internal warfare on cycle behavior”, so as the model is purely economic, each demographic collapse is, implausibly, immediately followed by a new rise.

The ultimate aim of Korotayev et al is to integrate the positive features of all three models (Chapter 3), but for now the take a closer look at the political-demographic history of China, the pre-industrial civilization that maintained the best records.

Chapter 2: Historical Population Dynamics in China – Some Observations

Below is a graph of China’s population on a millennial scale. Note the magnitude and cyclical nature of its demographic collapses. Note also that such cycles are far from unique to Chinese civilization (see collapse of the Roman Empire), and reflect for a minute, even, on the profound difference between the modern world of permanent growth, and the pre-industrial, “Malthusian” world.

Since it would be futile to repeat the fine details of every political-demographic cycle in China’s, I will instead just list the main points.

  • The cycles tend to be ones of a fast rise in population, when surpluses are high and people are prosperous. It plateaus and stagnates when the population reaches the carrying capacity, when there is overpopulation, much lowered consumption, increasing debilitation of state power, and rising social inequality and urbanization.
  • Sometimes, such as in the middle Sung period, population stress did not lead to a collapse, but instead to a “radical rise of the carrying capacity of the land” through administrative and technological innovations. This increased the permanent ceiling of Chinese carrying capacity from 60mn to around 120mn souls, and in doing so alleviated the population stress until the early 12th century (AK: e.g. in Early Modern Britain, the problem of deforestation was solved by coal). At that point, China may have once again solved its problems, even escaping from its Malthusian trap (AK: some historians have noted that it had many of the prerequisites for an industrial revolution). That was not to be, as “the Sung cycle was interrupted quite artificially by exogenous forces, namely, by the Jurchen and finally Mongol conquests”.
  • The Yuan dynasty would not reach the highs of the Sung because of the general bleakness of the 14th century – the end of the Medieval Warm Period, unprecedented floods and droughts in China, etc, which lowered the carrying capacity to a critical level. The resulting famines and rebellions led to the demographic collapse of the 1350′s, as well as the de facto collapse of the state, as China transitioned to warlordism.
  • Carrying-capacity innovations under the Ming did not, eventually, outrun population growth, and it collapsed during the turmoil of the transition to the Qing dynasty. The innovations accelerated throughout the 18th century (e.g. New World crops, land reclamation, intensification of farming). Indications of subsistence stress as China entered the 19th century were a) declining life expectancies, b) rising staple prices, and c) a huge increase in female infanticide rates in the first half of the 18th century. By 1850, China was again under very severe subsistence stress and the state grew impotent just as Europeans began to encroach on the Celestial Empire.
  • Huang 2002: 528-9, worthy of quotation in extenso. “Recent research in Chinese legal history suggests that the same subsistence pressures behind female infanticide led to widespread selling of women and girls… Another related social phenomenon was the rise of an unmarried “rogue male” population, a result of both poverty (because the men could not afford to get married) and of the imbalance in sex ratios that followed from female infanticide. Recent research shows that this symptom of the mounting social crisis led, among other things, to large changes in Qing legislation vis-à-vis illicit sex… Even more telling, perhaps, is the host of new legislation targeting specifically the ‘baresticks’ single males (guanggun) and related ‘criminal sticks’ of bandits (guntu, feitu), clearly a major social problem in the eyes of the authorities of the time”. See Diagram V.13. (AK: Interestingly, China’s one-child policy, by artificially restricting fertility in order to ward off a “Maoist dynasty” Malthusian crisis, has led to many of the same problems in the past two decades).
  • Speaking of which… China had further dips in its population after during perturbations in the 1850′s (the millenarian Taiping Rebellion), the 1930′s (Japanese occupation), and 1959-62 (the Great Leap Forward), each progressively smaller than the last in its relative magnitude. For instance, the latter just formed a short plateau.

Korotayev et al conclude the chapter by running statistical tests on China’s historical population figures from 57-2003. In contrast to linear regression (R^2 = 0.398) and exponential regression (R^2 = 0.685), the simple hyperbolic growth model described in “Introduction: Millennial Trends” produces an almost perfect fit with the observed data (R^2 = 0.968). So in the very, very long-term, the effects of China’s secular cycles are swamped by the millennial trend of hyperbolic growth.

Finally, the authors describe in-depth the general pre-industrial Chinese demographic cycle. Below is a functional scheme I’ve reproduced from the book (click to enlarge).

The main points are:

  • Fast population growth until it nears the carrying capacity, then a long period (100 years+) of a very slow and unsteady growth rate, accompanied by increasingly significant, but non-critical fluctuations in annual population growth due to climatic stochasticity (positive growth in good years, negative growth – along with dearth, minor epidemics, uprisings, etc – in bad years). These fluctuations get worse with time as the state’s counter-crisis potential degrades due to the drawdown of previously accumulated surpluses.
  • According to Nefedov’s model and historical evidence, the fastest growth of cities occurred during the last phases of demographic cycles, as peasants were driven off the land and there appeared greater demand for city-made goods from the increasingly affluent landowners (who could charge exorbitant rates on their tenants). Furthermore, some peasants are drawn into debt bondage because the landowner had previously given them food at a time of dearth. Other peasants turn to banditry.
  • Re-”elite overproduction → over-staffing of the state apparatus → decreasing ability of the state to provide relief during famines”. The system of state relief had been very effective earlier, e.g. in 1743-44 a state effort to prevent starvation in the drought-stricken North China core was successful. However: “By Chia-ch’ing times (1796-1820) this vast grain administration had been corrupted by the accumulation of superfluous personnel at all levels, and by the customary fees payable every time grain changed hands or passed an inspection point… The grain transport stations served as one of the focal points for patronage in official circles. Hundreds of expectant officials clustered at these points, salaried as deputies (ch’ai-wei or ts’ao-wei) of the central government. As the numbers of personnel in the grain tribute administration grew and as costs rose through the 18th century, the fees payable for each grain junk increased [from 130-200 taels per boat in 1732, to 300 taels in 1800, and to 700-800 taels by 1821]“. Similarly, the Yellow River Conservancy, whose task it was to prevent floods, degenerated into hedonistic corruption in the early 19th century; only 10% of its earmarked funds being spent legitimately.
  • So what you have is an increasingly exploited peasantry, a growing (and volatile) urban artisan class – e.g., the sans-culottes of the French Revolution, and more banditry. The bandits create a climate of fear in the countryside and force more outmigration into the cities, and the abandonment of some lands. At the same time, state power – military and administrative – is on the wane, displaced by corruption. The effects of perturbations are magnified due to the system’s loss of resiliency. There eventually comes a critical tipping point after which there is a cascading collapse that involves a population dieoff, the fall of centralized power, and a prolonged period of internal warfare.
  • Fast population growth does not resume immediately after collapse because things first need to settle down.

In my Facebook Note, Musings on the decline and fall of civilizations, I draw a link between the fast population increase / abundance of the “rise” period, and the concept of the “Golden Age” common to all civilizations. Also ventures a theory as to why cities (hedonism, conspicuous consumption, etc) have such a poor reputation as a harbinger of collapse… because they are, it’s just that the anti-poshlost preachers haven’t identified the right cause (i.e. overpopulation, not “moral decadence” per se).

Furthermore, a tentative explanation of the reason for differential Chinese – European technological growth rates (compare and contrast with Jared Diamond’s explanation):

Incidentally, a possible reason why Western Europe emerged as the world’s economic hegemon by the 19th century, instead of China, a civilization that at prior times had been significantly more advanced. But in China, the depth of the Malthusian collapses was deeper and more regular (once every 300 years, typically) than in W. Europe… Once the Yangtze / Yellow River irrigation systems failed, tens of millions of peasants were doomed; nothing on an equivalent scale in Europe, which is geographically and politically fragmented into many chunks and nowhere has anywhere near the same reliance on vulnerable hydraulic works for the maintenance of complex civilization (control over water was at the heart of “Oriental despotism” (Wittfogel); the Chinese word “zhi” means both “to regulate water” and “to rule”).

This theory that the reason China began to lag behind Western Europe technologically was because of its more frequent collapses / destructions of knowledge should be explored further.

Finally, about the nature of perturbations in a closed system under increasing stress… That is our world in the coming decades: even as Limits to Growth manifest themselves, there will be more (and greater) shocks of a climatic, terrorist, and military nature. The stochasticity will increase in amplitude even as the System becomes more fragile. As a result, polities will increase the level of legitimization and coercion, i.e. they will become more authoritarian.)

Chapter 3: A New Model of Pre-Industrial Political-Demographic Cycles

To address the shortcomings of other models and taking into account what happens in typical pre-industrial demographic cycles, Korotayev with Natalia Komarova construct their own model that includes the following three main elements:

(1) The Malthusian-type economic model, with elements of the state as tax collector (and counter-famine reservoir sponsor), and fluctuating annual harvest yields; this describes the logistic shape of population growth. It explains well the upward curve in the demographic cycle and saturation when the carrying capacity of land is reached. (2) Banditry and the rise of internal warfare in time of need are the main mechanism of demographic collapse. Personal decisions of peasants to leave their land and become warriors / bandits / rebels are influenced by economic factors. (3) The inertia of warfare (which manifests itself in the fear factor and the destruction of infrastructure) is responsible for a slow initial growth and the phenomenon of the “intercycle”.

Reproducing the model in detail will take up too much space, so just the main conclusions: “the main parameters affecting the period of the cycle are a) the annual proportions of resources accumulated for counter-famine reserves, b) the peasant-bandit transformation rate, and c) the magnitude of the climatic fluctuations. Hence, the lengths of cycles – and this is historically corroborated – is increased along with the growth of the counter-famine (more reserves) and law-enforcement (repress banditry) subsystems.

Chapter 4: Secular Cycles & Millennial Trends

Full version of Chapter 4: Secular Cycles and Millennial Trends.

The chapter begins by modeling the role of warfare, and challenges recent anthropological findings that denser populations do not necessarily lead to more warfare.

  • First, this is explained by the fact that it’s not a simple relation, but more of a predator-prey cycle described by a Lotka–Volterra equation. When warfare breaks out in a time of stress it leads to the immediate reduction of the carrying capacity and demographic collapse; however, warfare simmers on well into the post-collapse phase because groups continue to retaliate against each other.
  • Second, the methodology is flawed because it treats all wars the same, whereas in fact they tend to be far less devastating for bigger polities than for small ones. This is because bigger polities have armies that are more professional, and the length of their “bleeding borders” relative to total territory, is much smaller than for territorially small chiefdoms, for whom even low-intensity wars are demographically devastating. As such, more politically complex polities fight wars more frequently more frequently than smaller ones, but tend to be far less damaged by them.
  • Imperial expansions in territory coincide with periods of fast population growth and high per capita surpluses; later on, shrinking surpluses decimate the tax base and even defense proves increasingly hard (“imperial overstretch”). This correlation is very strong.

Now Korotayev et al combine their model from the last chapter with Kremer’s equation for technological growth (see the Introduction):

dT/dt = a*N*T

They also model a “Boserupian” effect, in which “relative overpopulation creates additional stimuli to generate and apply carrying-capacity-of-land-raising innovations”.

Indeed, if land shortage is absent, such stimuli are relatively weak, whereas in conditions of relative overpopulation the introduction of such innovations becomes literally a “question of life and death” for a major part of the population, and the intensity of the generation and diffusion of the carrying capacity enhancing innovations significantly increases.

Finally, they make the size of the harvest dependent not only on climatic fluctuations, but also on the level of technology.

Harvest i = H 0*random number i*T i.

Running this model with some reasonable parameters produces the following diagram, which reproduces not only the cyclical, but also the hyperbolic macrodynamics.

Furthermore,

Note that it also describes the lengthening of growth phases detected in Chapter 2 for historical population dynamics in China, which was not described by our simple cyclical model. The mechanism that produces this lengthening in the model (and apparently in reality) is as follows: the later cycles are characterized by a higher technology, and, thus, higher carrying capacity and population, which, according to Kremer’s technological development equation embedded into our model, produces higher rates of technological (and, thus, carrying capacity) growth. Thus, with every new cycle it takes the population more and more time to approach the carrying capacity ceiling to a critical extent; finally it “fails” to do so, the technological growth rates begin to exceed systematically the population growth rates, and population escapes from the “Malthusian trap” (see Diagram 4.26):

The cycles lengthen, and then cease:

AK: some confirmation for my rough explanation of why Chinese technological growth rate fell below Europe’s prior to the Industrial Revolution (see end of Chapter 2 in this post).

Of special importance is that our numerical investigation indicates that with shorter average period of cycles a system experiences a slower technological growth, and it takes a system longer to escape from the “Malthusian trap” than with a longer average cycle period.

Finally, they also add in an equation for literacy:

l i+1 = l i*b*dF i*l i*(1 – l i)

Which has the following effect on population growth:

N i+1 = N i*(1 + α × dF’)*(1 – l) – dR i – rob*N i*R i

And all added together, it produces the following stunning reproduction of China’s population dynamics from ancient past to today.

And concludes:

Of course, these models can be only regarded as first steps towards the development of effective models describing both secular cycles and millennial upward trend dynamics.

The Meaning of Cliodynamics

Turchin, Peter & Sergey NefedovSecular Cycles (2008)
Category: cliodynamics, world systems; Rating: 5/5
Summary: Read the whole book (PDF) or in chapters

This is a free online, quasi-popular book about eight different pre-industrial secular cycles (including Tudor England, the Roman Empire, Muscovy, and the Romanov Empire). Knowing the facts of history and the proximate causes of Revolutions – Lenin’s charisma, Tsarist incompetence, the collapse of morale and of the railway system, etc – is all well and good, but an entirely different perspective is opened up when looking at late Tsarist Russia through a social macrodynamic prism. The interpretation shifts to one of how late imperial Russia was under a panoply of Malthusian pressure, and of how the additional stresses and perturbations of WW1 “tipped” the system over into a state of collapse.

Finally, my reply to someone who sent me a message suggesting that cliodynamics may “make old school idiographic history redundant”.

I don’t think these trends will make idiographic history redundant, because there are many elements that are irreducible to mathematical analysis; furthermore, a major and inevitable weakness of cliodynamics is our lack of numbers for much of pre-mass literacy history. To the contrary, I think cliodynamics will end up complementing the “old school” rather than displacing it.

Footnotes

* Ray Kurzweil, one of the high priest of the singularitarian movement, extends Moore’s observations to also model technological growth (computing power, to be precise) as doubly exponential, or even hyperbolic. See Appendix: The Law of Accelerating Returns Revisited,

On the other hand, Joseph Tainter noted that in many areas the rate of technological innovation is actually slowing down. This is an argument that Kremer’s assumption that the rate of technological growth is linearly dependent on the product of the population and the size of the already-existing technological base is too simplistic.

These observations are supported by Planck’s Principle of Increasing Effort – “with every advance [in science] the difficulty of the task is increased” (i.e. you’re now unlikely to make new discoveries by flying a kite in a thunderstorm). Furthermore, “Exponential growth in size and costliness of science, in fact, is necessary simply to maintain a constant rate of progress”, and according to Rescher, “In natural science we are involved in a technological arms race: with every ‘victory over nature’ the difficulty of achieving the breakthroughs which lie ahead is increased”.

(Republished from Sublime Oblivion by permission of author or representative)
 
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The classic Marxist argument holds than an emerging bourgeois class, its wealth based on commerce, industry and capital accumulation, was constrained and frustrated in its political ambitions by the nobility. France was divided into Three Estates, the Third Estate which bore the taille (the main direct tax), the nobility (subject only to the capitation poll tax and viengtième) and the clergy (only required to donate a pre-negotiated don gratuit). The ‘privileged’ orders maintained monopolies, held the right to collect the tithe or seigniorial dues and enjoyed many exemptions, e.g. on military service, the corveé and most taxes. L.S. Mercier in his Tableau de Paris succinctly summed up the many grievances against the aristocracy – “The castles…possess misused rights of hunting, fishing and cutting wood…[and] conceal those haughty gentlemen who separate themselves effectively from the human race…who add their own taxes…beg eternally for pensions and places…[and] will not allow the common people to have either promotion or reward”. The last point was expounded on by the Abbé Sieyès, in the heady atmosphere of 1789, when he wrote, “All the branches of the executive have been taken over by the caste that monopolizes the Church, the judiciary and the army. A spirit of fellowship leads the nobles to favor one another over the rest of the nation”. These illustrated the main complaints of the Third Estate against the nobility – they were perceived as venal, reactionary and parasitic, a foreign blot on the French nation.

Yet the above view that 18th century France saw the bourgeoisie superseding the old nobility economically but being frustrated in their social ambitions by them is a flawed and simplistic narrative. The arguments of the revisionist school, which challenged the French Marxist interpretation of the Revolution as the replacement of the nobility by the bourgeoisie as the dominant class, are many and covering all major revisionist historians (Cobban, Taylor, Doyle, etc) is futile in an essay of such length. However, Schama’s Citizens encompasses their arguments in one book, albeit one we have to treat with caution due to its constant and unwarranted bias against the revolutionaries, harkening back to historical dramatizers like Carlyle, Dickens and Baroness Orkzy.

In a nutshell, Citizens considers the old regime to have been surprisingly modern – progressive, prospering, addicted to science and change. Old-style feudalism was supposedly already pretty much vanished from the countryside – most dues were equivalent to money rents. French state-funded pure science was the equal of any in Europe and was translated into many useful applications, particularly in military technology. Economic growth proceeded at 1.9% per annum in the late 18th century, a rate only matched during the era of the Empire and its artificial Continental System. Transport (from 1760 to 1780 travel times by coach from Paris to Bordeaux fell from fourteen to five days), communications and trade) were developing rapidly, unifying the French market. Industry burgeoned, growing at an impressive average of 3.8% per annum from the 1760′s to the Revolution) and was the most developed in Europe outside Britain. Growing literacy and the rise of a public opinion fueled an explosion in newspapers, pamphlets and encyclopedias.

Also incorporated is Doyle’s insight that by the late 18th century, nobility could be easily bought (France had 120,000 nobles in 1789, an order of magnitude greater than in Britain) and that the late ancien régime underwent fusion between the aristocracy and the bourgeoisie. While officially engagement in commercial activities was to be punished by derogation, in practice France’s leading industrialists were also nobles – for instance, the Duc d’Orléons, the King’s own brother, owned glass-works at Cotteret and textile plants at Montargis and Orléons. Such examples could be multiplied indefinitely. Moreover, the biggest frictions were not between the commercial bourgeoisie and nobles, but between different sections of the nobility – the usually successful urban nobles of Paris and the booming peripheral cities like Lyons, Marseilles, Bordeaux and Nantes, and the rural gentry, which comprised 40% of the noble population and frequently had nothing to distinguish themselves from the commoners around them than by their titles, and thus had the most to fear from a loss of privileges. This was the main reason behind the 1781 Ségur Law, which limited sales of military ranks to the old nobility and was primarily aimed against the recently ennobled nouveau riche. Furthermore, there is evidence that even the more ordinary bourgeoisie (which number some 2.3mn souls on the eve of the Revolution) admired and aspired to nobility – for instance, in December 1788 the lawyers of Nuits declared, “The privileges of the nobility are truly their property. We will respect them all the more because we are not excluded from them…why, then, suppose that we think of destroying the source of emulation which guides our labors?” For every corrupt and unpopular intendant there would be a progressive like Saint-Sauveur in Languedoc, who applied science to solve economic and public health problems in his province. To quote Schama in extenso, assuming modernity to be a “world in which capital replaces customs as arbiter of social values, where professionals rather than amateurs run the institutions of law and government, and where commerce and industry rather than land lead economic growth”, the “great period of change was not the Revolution but the late eighteenth century”.

So instead of being a class war between bourgeoisie and nobility, there is evidence that it was ideas, a reaction against this brave new world of ‘money and death’, that generated the Revolution. This new social phenomenon was based on several sources – foremost, philosophy and reviving interest in antiquity, all reinforced by the decline of absolutism throughout the eighteenth century and the rapid spread of literacy. Louis-Philippe, the Comte de Ségur, recalled in 1826 – “We were inclined to surrender whole-heartedly to the philosophical doctrines put forwards by men of letters…we took secret pleasure in the fact that these men attacked the old edifice that seemed to us to be so Gothic and ridiculous. Censorship in the last decades of the ancien régime was relatively light and forbidden books and pamphlets could be bought even near the entrance to the Palace of Versailles, where they found willing customers amongst the aristocrats and courtiers who as often as not were the subjects of their vitriol and ridicule. Rousseau captivated people with his aspiration to candidness, simplicity and Virtue; Voltaire criticized the bloated upper hierarchy of the Church; Montesquieu proposed the division of government into the legislative, executive and judicial branch, replacing the old feudal system of the Estates. In general invective was directed against the system of monarchical rule – writing the Rights of Man in 1791, Tom Paine summarized these sentiments by stating that “what is called the splendor of a throne is no other than the corruption of the state, which “indiscriminately admits every species of character to the same authority”.

A renewed interest in the ancient world stirred ascetic Roman ideals of asperity, simplicity and readiness to sacrifice, as exemplified by the tale of the Horatii (which inspired the famous David painting, Oath of the Horatii). Modern manifestations of the Roman ideal were seized upon, as illustrated by the emergence of patriot citizen heroes during the French involvement in the American Revolutionary War (against a monarchy!) – e.g. du Couëdic, a ship commander who became a patriot hero after his Pyrrhic victory over a British frigate in which he was mortally wounded and his sloop practically destroyed. And finally there was the reflection of these ideas in the popular culture of the time – plays caricaturing the privileged orders (e.g. The Marriage of Figaro), David’s paintings and the polemics of folks like Mercier and Linguet. Thus as we can there was more to the background of the Revolution that social and economic turbulence – also playing a great rule were new ideas like equality of opportunity, the virtues of simplicity and patriotism, and a return to an imagined past while being propelled forwards technologically – as gushingly envisioned in Condorcet’s futurist writings.

The other side of the Marxist argument is that, in Albert Soboul’s words, “The French Revolution was the crowning achievement of a long economic and social evolution that made the bourgeoisie the master of the world”. He has a point regarding his evaluation of the Revolution’s lasting legacy – in particular, that of its Constituent Assembly. The Declaration of the Rights of Man (1789) was the foundation for civil equality – Clause 2 states, “These [natural and inalienable] are liberty, property, security and resistance to oppression”. Guilds and price controls were abolished and the Le Chapelier Law (1791) prohibited workers’ associations. That said, many of the liberal reforms of that era were simply a continuation of previous royal policies. The main Revolution-inspired tax, a common one on land and movables, had precedents in Calonne’s reform proposals of 1786 and free trade was in favor from Turgot to the Eden Treaty. The removal of internal customs barriers and the emancipation of Protestants both happened in 1786 under the ancien régime.

The Revolution opened up careers to talent, which could only favor the bourgeoisie since urban workers and peasants did not have the educational opportunities to exploit this. However, in the short term, because of the Revolution’s distrust of professional associations (links to old regime corporatism and privilege), medicine and law were “thrown open to the market, with minimal qualifications required”, resulting in “revolutionary France being a happy hunting ground for quacks and charlatans”. Afterwards, the militarized bureaucracy that was the Napoleonic state employed 250,000 officials, five times more than the old regime and about 10% of the entire bourgeoisie, who even enjoyed the rudiments of a contributory pension system. The army was very successful in adapting to the new society, as Napoleon could testify. So the bourgeoisie, as in middle class, gained authority – but what about the other meaning of bourgeois, as in capitalist?

The Revolution affirmed property rights and produced aforementioned pro-capitalist legislation. However, in the short term it was a catastrophe – war and British naval superiority, coupled with revolts in the provinces led to the eclipse of France’s most dynamics economic sector in 1789, overseas trade, as well as the cities that sustained it (Bordeaux, Marseilles, Nantes, etc). Emigration and persecution of the old noble elites caused the collapse of Lyon’s silk industry. Granted, military campaigns and the Continental System created artificial demand for cotton and metallurgy, but these also collapsed following the defeats after 1812. From a long term perspective, the ruling class remained confined to land-owning nobles and bourgeoisie as before, who invested in land rather than industry, especially because of the mass sale of the biens nationaux – for instance, one asked what kind of Frenchman is mad enough “to risk his fortune in a business enterprise…[and not]…one of the confiscated estates”. France had to wait for the railways to really ‘take-off’ into its industrial revolution and its main impact, meanwhile, was in its ideas – nationalism, civil equality, sovereignty and meritocracy, which were born in the last decades of the ancien régime and propagated through Europe by French armies. “The people thought kings were gods upon earth…[now] it’s more difficult to rule the people”, according to Kolokotrones, a Greek brigand and patriot.

Following our analysis of the origins and results of the Revolution – in which we say that although its repercussions did impact somewhat on the social structure, the main motivations seem to have been based on ideas, not class – it’s time to look at course of the Revolution itself. The first and most famous French Revolution was, according to Lefebvre, actually four revolutions. The first was the ‘aristocratic revolt’, which, due to circumstances and Louis XVI’s indecisiveness and assorted gaffes, succeeded in calling up the Estates-General to approve new taxes. However, the privileged Estates’ insistence on the ‘forms of 1614′ transformed the debate – “King, despotism and constitution have become only secondary questions. Now it is war between the Third Estate and the two others”, according to the Abbé Sieyès. Eventually though, faced with deadlock and ominous signs from the government, they joined in common with a doubled Third and took the Tennis Court Oath. The popular revolution stormed the Bastille, took control of Paris and destroyed the capital’s hated customs wall on hearing rumors of a royalist plot to dissolve the National Assembly by force. Meanwhile the peasant revolution destroyed feudalism from below via the widespread burning of seigniorial obligations. The King was forced to back down. With its newfound power, the bourgeoisie used the National Assembly to enact Enlightenment-influenced civil equality reforms.

The above account is not as simply as it might appear. The composition of the Third Estate in the Estates-General of 1789 was actually mostly composed of venal office holders (43%) and lawyers (25%), while only 13% were involved in commercial activities. Furthermore, the Third was actually more conservative than the Second on the vast majority of economic and social issues! Also the Estates were prepared to fuse together into a National Assembly to demand a constitution and afterwards, all (former) orders overwhelmingly supported measured to eradicate privileges (e.g. the August Decrees).

The other major period as regards social interpretations is from the purge of the Girondins in June 1793 to the Thermidorian reaction in July 1794. Now the legacy of this period – the Maxima, forced loans, laws against hoarding, the Vendôme Laws – is certainly not pro-bourgeois under any understanding of the term. According to a variant of the Marxist interpretation, the bourgeois bent over backwards to appease the sans-culottes by implementing economic Terror. In this way war pressures (the levée en masse and its associated release of democratic sentiments), food shortages and radicalization of the clubs (e.g. Cordeliers) was to be sublimated and redirected against the Republic’s foreign enemies.

The problem with this interpretation is the assumption that the sans-culottes had a powerful political identity and goals of their own. They were in fact politically passive. They did not lash out when their champions were destroyed (e.g. Roux imprisoned under the Law of Suspects in September 1793, the Hébertists guillotined for their excessive zeal in March 1794, etc). All their journées during the period – the overthrow of the King, the purge of the Girondins, demands for the Maxima – were in any case supported by a large number of Assembly deputies. Finally, they faded as a political force after Thermidor once the war started going much better, despite the winter of 1794-95 being one of the harshest on record and rampant inflation following the abandonment of the Maxima. This is illustrated by the failed uprisings of Germinal and Prairial. One cause of this is that the “popular societies of the sections rarely numbered more than 400 members”, meaning that only 5% to 10% of Parisians actively participated (and were mainly drawn from artisans and shopkeepers), in contrast to the sectional battalions which numbered around 100,000 men. Thus they were too weak without the support of bourgeois Jacobinism. They defined themselves culturally (not politically) as favoring fraternity, liberty and candidness, and in opposition to the corrupt, superficial ‘aristos’. It wasn’t really a class with common social backgrounds, but rather an intellectual and cultural fad which predated the worker movements of the 19th century, e.g. in its politicized social goals and partial tolerance of a feminist movement.

Although in general the Jacobins shared moderately well-off bourgeois backgrounds, what defined them were their ideas. Robespierre dreamed of a Rousseaun Republic, a Romantic vision of Virtue as absolute end. But “virtue without which terror is harmful and terror which without virtue is impotent” – political Terror was necessary for the preservation of the Republic from its internal enemies and to inculcate virtue. Rationality, incorruptibility, candidness, the Supreme Being were virtue – and those who dared stand against it (Hébertists, dechristianizers, feminists, Enragés, etc) were to be smitten down by the guillotine. Even as the Convention passed Saint-Just’s Vendôme Laws (the transferal of the lands of émigrés to landless French patriots), the deportation of French vagrants to Madagascar was being seriously discussed. Furthermore, it was more about “punishing political crime and rewarding political virtue” than any social consideration, especially considering it “[only appeared] as an appendage to a prolonged denunciation of disloyalty”. The Thermidorian reaction was a grouping of republican moderates intent on ending the Terror, and consequent reprisals against the Terrorists were a matter of vengeance, not class war, since they were almost all bourgeois themselves.

While the Marxist view of the Revolution as a social struggle (transition from feudalism to capitalism) is useful in analyzing social changes between 1789 and 1799, it is bankrupt as an explanation for why tendencies already embedded in ancien régime France erupted so suddenly and violently. It was an unqualified boon only for landed middle-class bourgeoisie who were focused on a career of state service, but was disastrous for those in commerce (at least in the short-term). In general the bigwigs of the nobility retained their positions, and social conditions worsened for the urban poor because of the much reduced influence of the Church, which had been the main system of social support in the old regime. Amazingly, despite population increase, the number of hospitals in 1847 was 42% less than in 1789. However this was in a sense just an acceleration of late 18th century trends, when worker incomes plunged, economic inequality soared and the system was increasingly decried by polemicists like the doom-mongering Mercier. French reality fermented with the intellectual revolution of the Enlightenment to produce a social and above all an intellectual one. It was a revolution primarily inspired and fueled by ideas – not by class conflict.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.