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This is apparently true of the past 200 years, but I wonder if it’s not causal? There were millennia of unbelievably open markets which were marked by almost n

This is apparently true of the past 200 years, but I wonder if it’s not causal? There were millennia of unbelievably open markets which were marked by almost no growth at all.

lazide 3y ago
There has to be unrealized economical potential for growth. And there has to be shifts either in that potential, or in the machinery that uses it for change. Think of it like a potential gradient, or a gravity well, or a food source in biology. Open markets where markets have been open for awhile (and no new game changing things like new technology, new ideology, etc. have happened) will maintain homeostasis at that level. If new technology gets introduced, unless there is strong closed market forces to keep it from spreading, then you’ll have change (in this case growth) faster with open markets. It will equalize the potential faster. Which, depending on who you are, may be desirable or not.
- WalterBright 3y ago
  > There has to be unrealized economical potential for growth. Free markets have always found that potential.
  - lazide 3y ago
    Free markets help, but are not by themselves sufficient. Equalizing that potential is also not always in the interest of many parties. You don’t have to go back very far in history to find plenty of examples. Recent history has had massive and rapid technological development, and it’s been relatively easy to find win/win trades, so it’s easy to think it is. But the Caribbean slave trade, or US Deep South cotton trade, or Indian spice trade? Eh…. A little less clear.
    - WalterBright 3y ago
      > Free markets help, but are not by themselves sufficient. Example? > Caribbean slave trade And yet the free market in the US buried them, and the Caribbean remains poor.
      - lazide 3y ago
        I don’t think you have the history here. Technological development - decent ships, actually good and reliable navigation, and knowledge of exploitable opportunities (sugar markets, and later cotton). Energy gradient - cheap labor (in the form of slaves) in Africa, cheap arable land (Caribbean, US, South America), hungry markets with excess wealth in Europe. First, the Caribbean got exploited (with open markets!) rather brutally, until the slave rebellions starting in 1790, and further escalating. Haiti in particular, won their rebellion - and then were completely economically isolated (by closing the market!) by the European powers. They still have not recovered economically, same for most of the Caribbean. Around this time is when the US markets (less ideal to exploitation, but larger and more controllable) in both sugar cane and cotton started to take off using the same sources. Which fueled significant tension between the northern states (no crops easily amenable to slavery, rather being capital manufacturing, livestock, and secondary goods like weaving/textiles) and the southern states (many labor intensive crops, amenable to slavery). Attempts at controlling the open markets in these crops by dissimilar interests (by either banning slavery or by blockade) is what led to the civil war. The south couldn’t ban slavery without bankrupting their economy. The north couldn’t allow free trade/slavery continue without making themselves less competitive, as Europe has more developed textile mills and heavy manufacturing. So them getting the goods directly was undercutting northern US competitiveness. Notably, the British, being the first into the Industrial Revolution and the furthest along, were also the first major European power to not just ban slavery in their country - but all their colonies, and everywhere else they could reach. To cut off the ‘energy gradient’ of cheap labor, and make their products (more capital intensive manufacturing) more competitive. The Caribbean is poor because they rebelled against exploitation, but couldn’t capture the economic engine that was exploiting them - they got bypassed by a competitor. And by the time their competitor (US Deep South) also got broken, the underlying energy gradient that led to them being exploited at all was cut off. So all they had left was ruins, debt, and disease. Sucks to be them. So, depending on how you measure ‘good’, they’d have probably been a whole lot better off with a closed market that would never have let the initial energy gradient be formed to begin with, eh? Or at least not allowed the extremely rapid and rapacious exploitation. Think of open markets as a full open floodgate, and closed ones as having a valve at various degrees of closed off. Flooding is very ‘profitable’ if you can somehow harness it (very difficult to do), but can be very unpleasant and destructive for those caught in its path. It’s nearly impossible to die of thirst in a flood. Restrictive flow doesn’t product as much ‘profit’ but has the potential to produce more desirable outcomes if used effectively. As long as the dam doesn’t burst of course. If the valve is misused or turned off, it’s easy for some (or even all) to die of thirst. Pick your poison.
- sfink 3y ago
  > Open markets where markets have been open for awhile (and no new game changing things like new technology, new ideology, etc. have happened) will maintain homeostasis at that level. I think "homeostasis" is overselling it, even if I agree in the short to medium term. Any growth potential leads to pressure to take advantage of it, which leads to runaway growth until some sort of scarcity sets in, where one entity's ability to exploit the potential is decreased by other entities'. This leads to competition, which results in pressure for each entity to take advantage of more of it than other entities, which leads to entities evolving ways to restrict others' consumption even at the expense of their own. Free markets expand consumption of potential to the point of scarcity, at which time they produce evolutionary pressure towards non-free markets (via monopolies, regulatory capture, or whatever else is available). It's like a nutrient-rich drainpipe getting so clogged up with algae that the water stops flowing. Or fishing, where it's all good until you start making a serious dent in next year's breeding stock. Free markets in times of plenty can produce massive benefits. They raise people out of poverty, dramatically improve healthcare and education and opportunities, etc. AFAICT, they're the most powerful mechanism for doing so. And then eventually, they consume themselves. I take back the complaint about using "homeostasis". After all, it applies to systems that will eventually die.
  - lazide 3y ago
    When a creatures homeostasis gets too out of whack, yes - it dies. Notably, I have yet to see any system that won’t die eventually. The giant Communism experiment died in the 90’s, for one. Luckily, most have mechanisms to adjust - if they’re willing and able to do so. Cancer, notably, is one such situation that hijacks that mechanism. I’d argue that culturally, we have such a cancer forming right now. And it’s not capitalism, or communism, or politics, or guns or anti guns, or whatever. It’s our inability to focus on and care about what we, as individuals, actually need and want, and push for it. An inability actively being grown and reinforced by a number of entities - and allowed because we refuse to acknowledge our weaknesses too.
  - imtringued 3y ago
    The problem isn't scarcity actually. If you have scarcity, "it just works". It is in fact the opposite. Capitalism fails due to inevitable relative abundance. At some point you reach market saturation. Present abundant resources should be allocated to the future. This doesn't happen. When abundance happens, you no longer need full employment to produce all present consumption needs. However, the principle of hiring the most productive employees and letting them work full time results in the redundancy and unemployment of less productive people, because hiring a single employee has less fixed costs than hiring two employees assuming they both perform the same amount of work. The paradox is that the more productive person is producing the consumer goods of the person that was let go. That unemployed person can't afford to buy his own consumer goods since he doesn't get paid to produce them, because it saves the employer fixed costs. You could think of this as a greedy knapsack algorithm. This algorithm works while there is scarcity, since you can just hire all workers. It doesn't work when there is abundance, since workers have to earn enough income to buy their own products. Note how this relates purely to the structure of the economy. Now the classical objection to this is that the workers who produce but don't consume will save instead, which lowers the interest rate. This is supposed to happen even if the interest rate is already at zero or even negative. The capital market signals that present resources are supposed to be allocated to serve the future. This allows employers to hire the unemployed workers and let them work to satisfy future demand, such as interplanetary travel and colonization of the moon or building pyramids that last more than four thousand years.
WalterBright 3y ago
It's true for the last thousand years at least. A thriving middle class appeared in northwestern Europe a thousand years ago, a middle class of merchants and other businessmen.
- hef19898 3y ago
  Which middle class would that be, in 1024? The merchant princes came later, centuries later in fact. The only that would remotely qualify would be guild organized professions, and even those rose to prominence in the high and latr middle ages.
  - WalterBright 3y ago
    If I recall correctly, it was most apparent in the Netherlands with the textile industry. It wasn't princes, it was commoners setting up shops etc.
    - hef19898 3y ago
      The funny thing about all those guilds, as those were necessary to create something of a non-peasant class in the cities, is that zhey were absolutely not free market. They fixed prices, limited output, set salaries, limuted the number of workshops. In a sense, they were as much labor union as they were oligopols. What we consider free market came with the industrial revolution and colonialism and the national companies created to exploit those colonies. The first signs of that can be traced to the early renessaince era, with Italian merchant princes, the Fugger and the Hanse. Those were still subserviant to nobility and aristocratic rule so, while the industrial revolution capitalists and colonial companies were much less so. Fun fact: The workers building cathedrals were fully unionized, with all the benefits that's with that: limited work hours and days, health care, social security.
      - WalterBright 3y ago
        The places where the guilds had more power were less prosperous.
Gibbon1 3y ago
The last two hundred years saw the amount of energy available increase 50X. The US is into free markets because historically it's interests were anti-mercantilist.
- whatshisface 3y ago
  The amount of energy available hasn't changed in a billion years, only the activities of humans has.
  - Gibbon1 3y ago
    Please don't make silly comments like this.
    - whatshisface 3y ago
      You don't think the social context in which the energy was made available has anything to do with the fact that the growth occurred?

This is apparently true of the past 200 years, but I wonder if it’s not causal? There were millennia of unbelievably open markets which were marked by almost no growth at all.

lazide 3y ago

There has to be unrealized economical potential for growth. And there has to be shifts either in that potential, or in the machinery that uses it for change. Think of it like a potential gradient, or a gravity well, or a food source in biology. Open markets where markets have been open for awhile (and no new game changing things like new technology, new ideology, etc. have happened) will maintain homeostasis at that level. If new technology gets introduced, unless there is strong closed market forces to keep it from spreading, then you’ll have change (in this case growth) faster with open markets. It will equalize the potential faster. Which, depending on who you are, may be desirable or not.

WalterBright 3y ago
> There has to be unrealized economical potential for growth. Free markets have always found that potential.
- lazide 3y ago
  Free markets help, but are not by themselves sufficient. Equalizing that potential is also not always in the interest of many parties. You don’t have to go back very far in history to find plenty of examples. Recent history has had massive and rapid technological development, and it’s been relatively easy to find win/win trades, so it’s easy to think it is. But the Caribbean slave trade, or US Deep South cotton trade, or Indian spice trade? Eh…. A little less clear.
  - WalterBright 3y ago
    > Free markets help, but are not by themselves sufficient. Example? > Caribbean slave trade And yet the free market in the US buried them, and the Caribbean remains poor.
    - lazide 3y ago
      I don’t think you have the history here. Technological development - decent ships, actually good and reliable navigation, and knowledge of exploitable opportunities (sugar markets, and later cotton). Energy gradient - cheap labor (in the form of slaves) in Africa, cheap arable land (Caribbean, US, South America), hungry markets with excess wealth in Europe. First, the Caribbean got exploited (with open markets!) rather brutally, until the slave rebellions starting in 1790, and further escalating. Haiti in particular, won their rebellion - and then were completely economically isolated (by closing the market!) by the European powers. They still have not recovered economically, same for most of the Caribbean. Around this time is when the US markets (less ideal to exploitation, but larger and more controllable) in both sugar cane and cotton started to take off using the same sources. Which fueled significant tension between the northern states (no crops easily amenable to slavery, rather being capital manufacturing, livestock, and secondary goods like weaving/textiles) and the southern states (many labor intensive crops, amenable to slavery). Attempts at controlling the open markets in these crops by dissimilar interests (by either banning slavery or by blockade) is what led to the civil war. The south couldn’t ban slavery without bankrupting their economy. The north couldn’t allow free trade/slavery continue without making themselves less competitive, as Europe has more developed textile mills and heavy manufacturing. So them getting the goods directly was undercutting northern US competitiveness. Notably, the British, being the first into the Industrial Revolution and the furthest along, were also the first major European power to not just ban slavery in their country - but all their colonies, and everywhere else they could reach. To cut off the ‘energy gradient’ of cheap labor, and make their products (more capital intensive manufacturing) more competitive. The Caribbean is poor because they rebelled against exploitation, but couldn’t capture the economic engine that was exploiting them - they got bypassed by a competitor. And by the time their competitor (US Deep South) also got broken, the underlying energy gradient that led to them being exploited at all was cut off. So all they had left was ruins, debt, and disease. Sucks to be them. So, depending on how you measure ‘good’, they’d have probably been a whole lot better off with a closed market that would never have let the initial energy gradient be formed to begin with, eh? Or at least not allowed the extremely rapid and rapacious exploitation. Think of open markets as a full open floodgate, and closed ones as having a valve at various degrees of closed off. Flooding is very ‘profitable’ if you can somehow harness it (very difficult to do), but can be very unpleasant and destructive for those caught in its path. It’s nearly impossible to die of thirst in a flood. Restrictive flow doesn’t product as much ‘profit’ but has the potential to produce more desirable outcomes if used effectively. As long as the dam doesn’t burst of course. If the valve is misused or turned off, it’s easy for some (or even all) to die of thirst. Pick your poison.
sfink 3y ago
> Open markets where markets have been open for awhile (and no new game changing things like new technology, new ideology, etc. have happened) will maintain homeostasis at that level. I think "homeostasis" is overselling it, even if I agree in the short to medium term. Any growth potential leads to pressure to take advantage of it, which leads to runaway growth until some sort of scarcity sets in, where one entity's ability to exploit the potential is decreased by other entities'. This leads to competition, which results in pressure for each entity to take advantage of more of it than other entities, which leads to entities evolving ways to restrict others' consumption even at the expense of their own. Free markets expand consumption of potential to the point of scarcity, at which time they produce evolutionary pressure towards non-free markets (via monopolies, regulatory capture, or whatever else is available). It's like a nutrient-rich drainpipe getting so clogged up with algae that the water stops flowing. Or fishing, where it's all good until you start making a serious dent in next year's breeding stock. Free markets in times of plenty can produce massive benefits. They raise people out of poverty, dramatically improve healthcare and education and opportunities, etc. AFAICT, they're the most powerful mechanism for doing so. And then eventually, they consume themselves. I take back the complaint about using "homeostasis". After all, it applies to systems that will eventually die.
- lazide 3y ago
  When a creatures homeostasis gets too out of whack, yes - it dies. Notably, I have yet to see any system that won’t die eventually. The giant Communism experiment died in the 90’s, for one. Luckily, most have mechanisms to adjust - if they’re willing and able to do so. Cancer, notably, is one such situation that hijacks that mechanism. I’d argue that culturally, we have such a cancer forming right now. And it’s not capitalism, or communism, or politics, or guns or anti guns, or whatever. It’s our inability to focus on and care about what we, as individuals, actually need and want, and push for it. An inability actively being grown and reinforced by a number of entities - and allowed because we refuse to acknowledge our weaknesses too.
- imtringued 3y ago
  The problem isn't scarcity actually. If you have scarcity, "it just works". It is in fact the opposite. Capitalism fails due to inevitable relative abundance. At some point you reach market saturation. Present abundant resources should be allocated to the future. This doesn't happen. When abundance happens, you no longer need full employment to produce all present consumption needs. However, the principle of hiring the most productive employees and letting them work full time results in the redundancy and unemployment of less productive people, because hiring a single employee has less fixed costs than hiring two employees assuming they both perform the same amount of work. The paradox is that the more productive person is producing the consumer goods of the person that was let go. That unemployed person can't afford to buy his own consumer goods since he doesn't get paid to produce them, because it saves the employer fixed costs. You could think of this as a greedy knapsack algorithm. This algorithm works while there is scarcity, since you can just hire all workers. It doesn't work when there is abundance, since workers have to earn enough income to buy their own products. Note how this relates purely to the structure of the economy. Now the classical objection to this is that the workers who produce but don't consume will save instead, which lowers the interest rate. This is supposed to happen even if the interest rate is already at zero or even negative. The capital market signals that present resources are supposed to be allocated to serve the future. This allows employers to hire the unemployed workers and let them work to satisfy future demand, such as interplanetary travel and colonization of the moon or building pyramids that last more than four thousand years.

WalterBright 3y ago

It's true for the last thousand years at least. A thriving middle class appeared in northwestern Europe a thousand years ago, a middle class of merchants and other businessmen.

hef19898 3y ago
Which middle class would that be, in 1024? The merchant princes came later, centuries later in fact. The only that would remotely qualify would be guild organized professions, and even those rose to prominence in the high and latr middle ages.
- WalterBright 3y ago
  If I recall correctly, it was most apparent in the Netherlands with the textile industry. It wasn't princes, it was commoners setting up shops etc.
  - hef19898 3y ago
    The funny thing about all those guilds, as those were necessary to create something of a non-peasant class in the cities, is that zhey were absolutely not free market. They fixed prices, limited output, set salaries, limuted the number of workshops. In a sense, they were as much labor union as they were oligopols. What we consider free market came with the industrial revolution and colonialism and the national companies created to exploit those colonies. The first signs of that can be traced to the early renessaince era, with Italian merchant princes, the Fugger and the Hanse. Those were still subserviant to nobility and aristocratic rule so, while the industrial revolution capitalists and colonial companies were much less so. Fun fact: The workers building cathedrals were fully unionized, with all the benefits that's with that: limited work hours and days, health care, social security.
    - WalterBright 3y ago
      The places where the guilds had more power were less prosperous.

Gibbon1 3y ago

The last two hundred years saw the amount of energy available increase 50X. The US is into free markets because historically it's interests were anti-mercantilist.

whatshisface 3y ago
The amount of energy available hasn't changed in a billion years, only the activities of humans has.
- Gibbon1 3y ago
  Please don't make silly comments like this.
  - whatshisface 3y ago
    You don't think the social context in which the energy was made available has anything to do with the fact that the growth occurred?