Sunday, July 4, 2021

Wealth as a strange attractor

From Wikipedia:

Societal collapse (also known as civilizational collapse) is the fall of a complex human society characterized by the loss of cultural identity and of socioeconomic complexity, the downfall of government, and the rise of violence... A collapsed society may revert to a more primitive state, be absorbed into a stronger society, or completely disappear.
Virtually all civilizations have suffered this fate regardless of size or complexity.
They list five "possible causes" in the first paragraph
natural catastrophe, war, pestilence, famine, and depopulation

and eight "causative factors" in the third:

environmental change, depletion of resources, unsustainable complexity, decay of social cohesion, rising inequality, secular decline of cognitive abilities, loss of creativity, and misfortune.

"Bad economic policy" doesn't appear on either list. It should be first.


From the list of eight, "loss of creativity", that's Toynbee. In the "Argument" of the abridged A Study of History, under the heading "The Breakdowns of Civilizations" we read:

The nature of a breakdown can be summed up in three points: a failure of creative power in the creative minority, which henceforth becomes a merely ‘dominant’ minority; an answering withdrawal of allegiance and mimesis on the part of the majority; a consequent loss of social unity in the society as a whole.

Toynbee's phrase "withdrawal of allegiance" is equivalent to Wikipedia's "loss of cultural identity". His "mimesis" -- mimicry -- is the method by which social and cultural innovations spread through the society and bind it together, until the breakdown.

Oh, and Wikipedia's "virtually all civilizations have suffered this fate" is a reflection of Toynbee's observation, expressed in the same paragraph quoted above, that

Of twenty-eight civilizations that we have identified (including the arrested civilizations in the list) eighteen are dead and nine of the remaining ten -- all, in fact, except our own -- are shown to have already broken down.


From the list of eight, "decay of social cohesion" is Toynbee's "loss of social unity". On page 365 in the abridged Study, from Chapter V: The Disintegrations of Civilizations:

... we have found already that the ultimate criterion and the fundamental cause of the breakdowns which precede disintegrations is an outbreak of internal discords ...

The social schisms in which this discord partially reveals itself rend the broken-down society in two different dimensions simultaneously. There are vertical schisms between geographically segregated communities and horizontal schisms between geographically intermingled but socially segregated classes.

... [T]he horizontal schism of a society along lines of class is not only peculiar to civilizations [as opposed to primitive societies] but is also a phenomenon which appears at the moment of their breakdowns and which is a distinctive mark of the periods of breakdown and disintegration, by contrast with its absence during the phases of genesis and growth.

This is huge. When differences between classes start giving rise to troubles in society, Toynbee says, the civilization has reached the "breakdown" stage. He is saying there is a natural limit to the concentration of wealth and income, a limit beyond which civilization can no longer continue to advance, but will begin to decline.

Toynbee does not explicitly specify the economic aspects of class struggle, rising inequality and the like. Myself, I would have insisted that economic factors are the root of the problem.

By the way, "rising inequality" is also on the list of eight.


My theory of decline: The rise and decline of civilizations is an economic cycle. Concentration of wealth is the cause of decline. When wealth grows faster than it concentrates, wealth spreads, and you get the upswing of the cycle. When wealth concentrates faster than it grows, you get the downswing.

If you want people to join your group, or if you want "voluntary allegiance" (Toynbee's term) from your own citizens, you need to create wealth faster than it concentrates.

2 comments:

Lorraine said...

Having to create wealth faster than it concentrates sounds like quite the red queen race, and mondo unsustainable. Better just to redistribute it.

The Arthurian said...

Hi Lorraine,

When I say we have to "create wealth faster than it concentrates", don't assume I mean we should let wealth continue to concentrate so far and so fast as it has done.
In order for "the rest of us" to see living standards improve, wealth has to increase more quickly than it concentrates.

Redistribution is probably a necessary part of the process. But it is not enough. What we really need is to redesign the system AWAY from concentration, because it has been designed over many decades to FAVOR concentration in many ways.

In addition to redistribution, or possibly instead, I dunno, we need something like broad natural distribution of wealth, where the act of creating wealth causes wealth to spread.
As things stand now, the policies that encourage wealth creation do so by creating incentives that reward wealth creators. That's self-defeating policy.

Whether growth is sustainable is a separate question. The answer depends on what we want to grow and how we choose to grow it. This is more of a social issue than an economic one, I think.
Economic policy should definitely be used to achieve social objectives, yes. But the policy has to be done with effective economics or it will not work.